Windfall Gst From Rising Fuel Prices

9 June 2008

Media Release

Windfall Gst From Rising Fuel Prices

The large windfall GST revenue gain the Government is getting from rising fuel prices should be returned to the regions where it could be usefully used to accelerate transport projects, says Auckland Chamber of Commerce head Michael Barnett.

He notes petrol prices have increased by about 29% over the past two years, giving the Government an estimated boost of around $70 million in GST

Around a third of GST windfall the government is getting from fuel prices will have been raised in Auckland, he notes.

While an indicative figure only, around $23 million of windfall tax has been taken from Aucklanders into the Government’s coffers over the past two years.

“A strong case exists for the government diverting this or equivalent revenue back to Auckland to mitigate for the delayed regional fuel tax.”

This would seem to be a reasonably equitable proposition, given the Government’s reason for delaying the RFT is the increasing price of fuel, yet at the same time they are clearly experiencing a windfall gain in GST revenue for exactly the same reason.

In a verbal submission to the Auckland Regional Council Annual Plan hearing this morning, Mr Barnett encouraged the ARC to take the topic up with the Government and ask that the ‘windfall’ GST dividend be ring fenced to contribute to the regional projects that the RFT was created to pay for.

It would enable the region’s key projects to continue in a way that doesn’t additionally penalize Aucklanders through an RFT, he concluded.

ENDS

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