Contractors oppose delay in petrol tax rise

Roading contractors have complained that a delay in introducing a 5c petrol tax increase could be costly for them.

Roading New Zealand, representing land transport industry contractors, has expressed concern over the possible delay in the petrol tax rise.

The Government had planned to introduce the petrol tax increase on April 1 but had a rethink on the start date because of high oil prices.

Parliament's finance and expenditure committee has been considering the Customs and Excise (Motor Spirits) Amendment Bill, which provides for flexibility over the timing of when the tax is introduced.

The 5c extra tax is expected to raise about $207 million a year.

The Government is allocating 35 per cent of the increase to roading projects in the Auckland region, with the remaining 65 per cent for the rest of the country.

The select committee received 16 submissions on the bill, most opposing the increase and suggesting the funding required for land transport should be provided from the duty currently allocated as general Crown revenue, the select committee said in its report tabled in Parliament yesterday.

Roading New Zealand argued that, after the proposal was first announced in December 2003, the contracting industry began preparing for roading infrastructure projects that would be funded by the additional excise.

Some 450 people had been employed in the past six months to meet the expected labour demand, and there had been significant investment in plant and capital, the report said.

Roading New Zealand had suggested if the petrol tax increase was delayed and alternative funding not provided, the roading contractor industry might experience "significant difficulties", the report said.

But most of the committee believed it might be appropriate to delay the rise until oil prices eased.

- NZPA