Government delivers $480 million reduction in ACC levies

ACC Minister Judith Collins today announced reductions to motor vehicle levies in 2015/16 meaning the average New Zealand vehicle owner will be $135 better off each year.

“Earlier this year the Government signalled our intention to reduce ACC levies as part of Budget 2014 – today’s announcement delivers on this,” Ms Collins says.

“ACC continues to improve its financial situation, transforming the way it supports injured New Zealanders and building on its investment returns.”

In the last levy round significant reductions were made to the Work and Earners’ Accounts. This year’s focus is on reductions to the Motor Vehicle Account. The average levy will fall from around $330 to $195. This includes reductions to the licence fee and a drop of 3 cents per litre off the petrol levy.

In addition, the average levy paid by employers and self-employed people into the Work Account will fall to 90 cents per $100 of liable earnings, down from 95 cents.

“These reductions to Work and Motor Vehicle levies represent an annual saving of $480 million to New Zealand households and businesses in the 2015/16 levy year,” Ms Collins says.

“This year’s reductions, which come on top of reductions over recent years, have meant that New Zealand households and businesses will keep almost $1.5 billion, since 2011/12.

“The Government will also introduce risk rating for light passenger vehicles (cars). This will place vehicles into bands, based on their crash safety ratings, from most safe to least safe and charge each band a levy based on the cost to the scheme of different vehicles.

“While all vehicle owners will receive considerable reductions in their ACC levies, we want to ensure the amount people are paying reflects the cost to the Scheme.”

As an example, the introduction of risk rating for cars, together with the overall reduction of motor vehicle levies, owners of petrol-driven cars in the safest grouping will see the ACC component of their annual vehicle licence fee fall by 66 per cent.

Ms Collins says while the Government remains on track for further levy cuts across all accounts in 2016/17, it’s important levies continue to be set in a way that is fair, fiscally responsible and maintains ACC’s ability to fund entitlements in the future.

“We are working through the exact amounts and timing of those levy reductions and a review of the residual levy – whose role is effectively completed – is part of that consideration,” Ms Collins says.

The new ACC levy rates for motor vehicles will come into effect on 1 July 2015. The lower Work Account levy rate takes effect on 1 April 2015.

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