ACC Minister Iain Lees-Galloway not thrilled with the prospect of new petrol tax

ACC Minister Iain Lees-Galloway said Government is "acutely aware" that Kiwi families face rising living costs and have had suppressed wages for 10 years. Photo / Doug Sherring

ACC will have to make a "very strong case" as to why it thinks petrol prices should increase by a further two cents a litre.

This is according to ACC Minister Iain Lees-Galloway, who said Government is "acutely aware" that Kiwi families face rising living costs and have had suppressed wages for 10 years.

This morning, ACC proposed increasing the road user levy which would increase the price of petrol by two cents a litre.

This would be on top of this weekend's introduction of nationwide petrol excise duty of 3.5 cents a litre.

ACC has proposed the levy be increased to help pay for the increasing costs associated with the higher number of road accidents across the country.

The Opposition has called on the Government to immediately rule out implementing the levy, but Lees-Galloway is waiting until ACC's four-week public consultation period has ended before making his recommendation to Cabinet.

But speaking to media, he did not sound keen on slapping another tax on Kiwis at the pump.

"I can assure everyone that this Government is very well aware of the cost pressure New Zealanders face – we're able to take that into account when we make our decision about ACC levies and we will."

National's Transport Spokesman Jami-Lee Ross said the levy is yet another tax that is being proposed to hit motorists at "literally the worst possible time."

"We're already seeing stories of the record high price of fuel taking food off the table for families and putting the pinch on household budgets across New Zealand."

A regional fuel tax was introduced in Auckland on July 1 and generated $13.2 million in its first month of operation – $700,000 more than initial estimates.

Earlier this week, average fuel prices surpassed $2.40 a litre in some areas.

"The Government needs to rule it out immediately as well as put a hold on their new fuel taxes," Ross said.

The AA's petrol prices spokesman Mark Stockdale is questioning the timing of ACC's proposed levy.

He said motorists would not be happy with yet another petrol levy, given $1.07 of every litre of petrol is now taxed.

That number jumps to $1.18 within Auckland.