Drivers get best of ACC levy changes

Motorists will benefit but wage-earners and the self-employed will be worse off under proposed changes to ACC levies.

ACC yesterday released for consultation the levy rate changes it wants for the 2006/2007 year.

It is recommending a drop of $16.93 to $190 per vehicle per annum in the motor vehicle account.

Its preferred option would be to keep the petrol levy, which contributes 39 per cent of the motor vehicle account's levy income, unchanged at 5.78c a litre but reduce the annual licensing fee to $111.

Alternatively the overall reduction could be delivered through a lower petrol levy and an unchanged licence fee or by smaller cuts to both.

No change is proposed to the employer's account, which covers wage and salary earners' workplace accidents.

But ACC is looking for an increase of 9c to $1.16 per $100 of earnings in the earners' account, which covers employees' accidents outside the workplace. That is collected with PAYE income tax by the Inland Revenue.

The self-employed face an average increase of 35c to $3.57 per $100 of earnings. Their scheme covers both work and non-work injuries.

About 6c of the proposed increase reflects a law change which boosts weekly compensation for newly self-employed people, whose previous income from paid employment can be taken into account.

But the larger problem is that while the cost of injuries among the self-employed has been rising, their leviable incomes have shown a declining trend and now average only $20,600 a year.

ACC believes this reflects more farmers and other self-employed people putting their businesses into a company structure for tax purposes.

That means that some income is captured by the employers' account, but some escapes ACC because it is classified as a return on capital rather than as labour income.

Despite strong prices for meat and dairy products, average self-employed farmer incomes have fallen from $32,200 after tax in 2002 to $25,000 this year, while injury costs have risen 43 per cent.

"If you have a smaller pool of earnings to meet rising injury costs it is inevitable levy rates have to rise," said ACC chief executive Garry Wilson.

Interested parties have until November 3 to make submissions.