Petrol has long been an easy source of revenue for Governments of all stripes in New Zealand. The tax is swallowed in the price at the pump and fractional annual increases are hardly noticed, mainly because the market price of petrol fluctuates so much.
When the price is down below $1.40 a litre, the Government is responsible for well over half the charge at the pump but, ironically, it is when the market price is high and the Government's take therefore is proportionately smaller that the tax is more likely to be resented.
Right now the price is very high — around $2.40 a litre for 91 octane — and the National Party clearly senses public resentment is building. National has calculated that the Government's 3.5c increase in petrol excise this month means the average household is paying $200 a year more in petrol taxes than it was last year.
The Prime Minister responded yesterday that petrol company margins are now twice what they were 10 years ago. This merits further investigation once the Commerce Commission has been given the necessary powers. But the level of taxation remains questionable too.
The Automobile Association has called for GST to be removed from the excise component of the petrol price. At that time it would have meant a reduction of 10c a litre and the retail price was around $2.30. So the reduction would have been wiped out by the price rises since. It would seem a mistake to complicate GST for the sake of transient relief.
