KEY POINTS:
Beware what you wish for. Auckland local bodies have long regarded a regional petrol tax as the elixir of life. Anything to do with transport - from electric railways to a western ring road that might otherwise be tolled - could be done supposedly with a levy on local petrol sales. It got to the point that people were reminding the transport boosters they had spent the petrol tax several times over, though they had still to get the power to impose it.
They are about to get that power now. The Budget announced that regions would be allowed to levy up to 10c a litre for approved projects and gave its nod to Auckland's rail electrification. Once Parliament has passed the necessary legislation, the levy can be applied.
Now that they have got their wish, they are a little nervous about it. At a meeting of the Auckland Regional Council's land transport committee this week, it occurred to council members from North Shore and Franklin District that their residents would not be overjoyed at paying 10c extra for petrol so that south, west and central Auckland could get electric trains.
Other predictable problems have been aired too, notably the boundary issues that always arise when a selective tax is designed. For a regional petrol tax the boundary issues are stark. Service stations near the regional boundaries will be either heavily penalised if they are inside the region, or greatly advantaged if they are just outside it. Kaiwaka, for example, has the first service station outside the region for vehicles heading north. It can expect a bonanza. Outlets in nearby Wellsford might starve.
The inequity has led ARC chairman Mike Lee to postulate a graduated petrol tax, with a lower rate near the boundary. Maybe it is possible to set a rate in Wellsford low enough to make it not worth the cost of driving to Kaiwaka to evade it. Maybe. More likely a graduated rate would multiply the boundary inequities, repeating them at every change in the rate.
A better solution could be to set the boundaries of the levy somewhat short of the region's edge. Districts beyond Papakura in the south and Waiwera in the north are not going to see much benefit from the public transport developments to be financed by the petrol tax. North Shore and Hibiscus Coast, though, should be included. They may not be served by a railway, but the northern busway now under construction is a near equivalent and is drawing $290 million from the pool that the petrol tax will replenish.
If the tax boundary is drawn at Waiwera and Papakura, the inequities could be rendered negligible. Is anyone going to drive to Warkworth or Pukekohe to save 10c a litre? Petrol prices are not the standard, well-known figures they used to be. Since deregulation, prices have fluctuated with international market influences and exchange rates and recorded greater variations between suppliers.
The last rapid rise in the world price lifted the litre cost by far more than 10c. This week, a typical week, one of the big four companies raised its price by 8c a litre, then cut the increase back by 4c in the main centres as rivals failed to follow the rise. At around 156c a litre, pump prices are now well beyond the level at which people take note of small differentials and drive around the corner for a few cents less.
Regional decision makers should breathe through their noses on this one. Taxing is never comfortable, fortunately, but the problems of equity and efficiency can be exaggerated. Not many people will go out of their way to avoid a 10c levy, not enough to worry about. The main concern is whether the levy-funded projects can fulfil their promise. The test of the tax will be in the traffic. If cars start to move at a better clip, the levy will be worth every cent.
