KEY POINTS:
A research company says four out of five New Zealanders think the Government should consider lowering taxes on food and petrol.
The Government today again ruled out cutting GST on petrol saying it wouldn't make any difference, but Research New Zealand said a poll showed the public did not agree.
The poll of 500 people found 80 per cent of New Zealanders thought taxes should be cut on food, 81 per cent thought tax on petrol should be lowered and 67 per cent thought taxes should be cut on electricity and gas.
When asked about their financial situation, 37 per cent of New Zealanders said it was "somewhat worse" and 13 per cent "a lot worse.
The Automobile Association, business groups and others have called for cutting GST on petrol, while the Australian federal government has floated cutting GST on fuel excise - the so-called tax on tax - which would save motorists just under four cents a litre there.
However, state governments which collect the GST are opposed to losing the revenue.
Here the move would save about 6c a litre and the Auckland Chamber of Commerce has said the Government has scored a $70 million windfall as petrol prices had increased by about 29 per cent over the past two years.
Finance Minister Michael Cullen told reporters today that the Government did not collect more revenue overall when petrol prices were hiked as people reduced petrol use and spent less on other items.
"The Government is not collecting more GST, it's collecting the same amount of GST. It's just made up in a different way," he said.
He accepted dropping the tax on petrol would offer immediate relief but "something else" would have to give.
"Either we borrow more money and that costs the Government money, costs the taxpayers money, or we cut social services or we have to find other revenue from somewhere else, increase taxes in some other way.
"It looks like an answer but it's not actually an answer at all."
Commerce Minister Lianne Dalziel has announced a government inquiry into petrol pricing. She said yesterday the inquiry would give consumers greater certainty over how prices were set and could see changes in prices around the margins but did not expect great changes.
Independent consultants Hale and Twomey have been appointed to review and analyse petrol pricing. The study would follow one by the Australian Competition and Consumer Commission (ACCC) into the price of unleaded petrol.
Dr Cullen was asked today about oil companies' behaviour.
"The fundamental drivers of cost are beyond the control in that sense, it's not that I think they are fiddling the price - there's always an issue about whether there's an excessively quick reaction (to put prices up)."
The inquiry would consider how prices were increased or decreased.
"Undoubtedly oil companies are making very large profits out of the stress and strain on ordinary households throughout the world," he said.
"The fundamental driver here is the actual price of oil and that's gone up an enormous amount over the last year... The reality is we are living in a world at the moment of very high oil prices and that's putting a lot of strain on household budgets."
National Party Leader John Key also indicated his party was unlikely to support a cut in taxes on petrol.
- NZPA
