Don Brash MP
National Party Leader

12 September 2005

National pledges relief on petrol excise

A National Government would reduce petrol excise by 5 cents per litre as a means of returning the windfall GST currently being collected on the record high prices of petrol.

“This commitment would be acted upon immediately to take effect on 1 October 2005, and the reduced excise level would apply until 1 April 2006 when the National’s programme of tax reductions will come into effect,” said National Party Leader Don Brash on the campaign trail in Pukekohe today.

“This will give much needed relief to all motorists, small business, and farmers.

“One of the key points of difference between the National and Labour parties in this campaign is that the National Party is opposed to over-taxation - revenues that are beyond the government’s reasonable requirements.

“I want to emphasise at the outset that the reduction in excise will not result in a reduction in funding for our roading programme.

“In recent weeks we have seen world oil prices reach very high levels indeed, and petrol prices in New Zealand rise accordingly.

“The consequence has been that the 12.5% GST collected on those high prices is now presenting the government with a substantial tax windfall. On the other side of the coin, those high prices are causing very substantial hardship for many New Zealand families.

“Despite that windfall profit from GST, the National Party is totally opposed to any tinkering with GST. But GST on a litre of petrol has risen from about 13 cents a year ago, to 17 cents at today’s petrol prices.

“The reduced excise will result in motorists paying $100 million less in excise duty during the six months from 1 October 2005 to 1 April 2006, to be offset, of course, by the windfall GST component. So, even after making the changes I have announced today, it is likely that the reduced excise will have a negligible effect on overall Crown revenues.

“With the impact of Hurricane Katrina, it is now unlikely that oil prices will fall dramatically over the next six months, but were they to do so, this would result in a modest overall impact on Crown revenues.

“The National Party believes that the government is, in effect, profiteering at the expense of motorists under the current conditions. Accordingly, we see the modest, temporary reduction of excise I have announced today as the fair and sensible short-term path to take.

“Our income tax reductions from 1 April 2006 will, of course, give much more substantial relief,” said Dr Brash.

ENDS

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