Out with the old tax, in with the new

Higher fuel taxes are to be heaped on the good people of Eketahuna to help make life easier for Aucklanders.

An extra burden of 3 cents per litre in fuel excise duty kicks in from 1 October and another 3 cent per litre increase from 1 October next year.

This will hit rural people harder than city folk, because too many have big distances to drive just to find a petrol pump, let alone to do business, and are reliant on road to freight their stock and so on.

Sure, the Government is saying the fuel taxes will be used for roading nationally.

But Alf’s gut instinct is to be sceptical, after Transport Minister Steven Joyce announced a slew of transport decisions this afternoon, including confirmation of the government’s commitment to the electrification of Auckland rail.

This was to have been funded through the regional fuel tax.

But – drum roll please – that tax has been removed. Was that a big hurrah from Aucklanders?

It will be partially replaced by increases in national fuel taxes.

That’s where Eketahunans are likely to squawk (and maybe heave a brick or two through Alf’s window).

It looks politically dumb, at first glimpse. But Joyce is a good Nat, and it’s hard to imagine a good Nat wanting to upset the good people of Alf’s true-blue constituency.

So let’s look at the announcements one by way, then spend a few hours thinking about it, before drawing conclusions.

First to arrive at Alf’s electorate office was a joint media release from Prime Minister John Key and Transport Minister Steven Joyce.

In this, they outlined government plans for simpler, more efficient funding of the country’s transport system.

They put the good stuff first: The biggest effect of the changes will be almost $1 billion in additional investment in state highway construction over the next three years.

Then came a list of some of the measures:

* Replacing regional fuel taxes with smaller increases in national fuel excise and road user charges, which feed into the National Land Transport Fund

* Confirming the government’s commitment to Auckland rail electrification

* Committing an additional $258 million of the government’s capital allocation to land transport over the next two years

* Amending the Government Policy Statement on Land Transport Funding to make more money available for state highway construction

Mr Key says these measures will, over three years, free up close to one billion additional dollars for building new and improved state highways, taking the total amount available for such work to around $3 billion over three years.

”An additional billion dollars of construction of new and improved state highways will be an important stimulant to the economy as more jobs are created in the roading and construction sectors,” Mr Key says.

“The increased activity will help New Zealand get through the recession, but just as importantly, improving the state highway network will also put the country in a better position to grow more quickly when the world economy picks up again.”

Next statement to arrive (again jointly from John Key and Steven Joyce) announced almost $1 billion of additional investment in the state highway network over the next three years as part of the government’s Jobs and Growth plan.

The benefits “will be felt across the board and around the country through new jobs, increased growth and, over time, an improved state highway network.”

So where does the money come from?

* $420m reallocation from non-state highway classes (including savings on administration costs).

* $258m in new Crown investment (paying for the NZ Transport Agency’s share of Wellington Passenger rail infrastructure).

* $283m increases in fuel taxes (beginning 1 October and replacing regional fuel taxes).

Joyce says the new draft Government Policy Statement shows investment in State Highway Infrastructure continuing at around 33-34% of the total fund over the 10 year horizon, instead of dropping to 22-24% as predicted in the Labour Government’s Government Policy Statement (GPS).

Joyce said:

“This package will help to progress important roading projects like the Waikato Expressway, the Christchurch Southern Motorway, State Highway 1 from Puhoi to Wellsford and Victoria Park in Auckland.”

Can’t see anything in that lot to mollify Eketahunans.

Then came a statement from Joyce to say the government will not proceed with regional fuel taxes, which are an “expensive and inefficient” means of collecting revenue.

He said the government is opposed to regional taxes of almost 10 cents in Auckland or anywhere else.

”Regional taxes impose significant compliance costs to businesses and road users, and would result in much higher fuel prices for motorists in some regions.

”Our preference is for a simpler system which delivers benefits to road users across the board.”

So from 1 October this year motorists will pay an increase of 3 cents per litre in fuel excise duty and drivers of diesel vehicles will pay the equivalent in road user charges.

A second 3 cents increase will occur at October 1 next year.

Each 3 cent per litre increase includes an annual increase of 1.5 cents per litre scheduled by the previous government, Joyce points out (to let people know it’s not all being imposed by we Nats).

Statement Number Four confirmed the government’s commitment to the electrification of Auckland rail, which was to have been funded through the regional fuel tax.

“ONTRACK’s electrification plans will proceed unchanged,” Joyce said.

Alf shan’t bore constituents with the details. The electrified trains won’t be coming through Eketahuna.

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