While much of the world contends with rising fuel prices spurred by the ongoing invasion of Ukraine by Russia, Kiwis can sigh with relief following the announcement by PM Jacinda Ardern that petrol excise duty will be cut alongside road user charges.
She said that the global energy crisis was due to the war and was resulting in shock and a spike in prices at the pump felt across the world. She added that this was exacerbating global supply chain disruptions and driving up consumer demand, resulting in high levels of inflation in many countries.
With inflation having risen by 5.9% during 2021 and the CPI reaching its highest level in three decades, Kiwis have had to contend with higher expenditures. The biggest contributor to inflation has been the transport sector as the prices for petrol and second-hand cars spiked.
Petrol pump prices increased by about 30% during 2021. This amounted to a litre of 91 octane petrol retailing at $2.45 by the end of 2021. Currently, regular 91 is being sold at a record high of over $3 a litre and is expected to reach a high of $4 this year. The removal of the fuel excise duty alone will deduct about 25 cents per litre of fuel and amount in savings of roughly $11 when filling a 40-litre tank and $17 when filling a 60-litre tank.
The measures outlined by PM Ardern are to last just three months, until mid-June when they will be reviewed. The shortfall in tax revenues that will be created by these measures will be covered by moving $NZ350 million from the country’s unallocated Covid-19 response fund. Public transport fares are also going to be cut by 50% for three months, beginning on April 1. This measure is expected to cost the government an estimated $NZ40 million in revenues.
There have been diverse reactions to this announcement. While some lcals are glad for even the minor relief from spiralling living costs, others feel that government spending would be better spent on targeted efforts to assist those who would benefit more.
National’s Christopher Luxon has supported the measures but also feels the government is not doing enough to address the wider cost of living crisis. He pointed to increasing food costs and higher income taxes as issues of concern. He reiterated that adjusting tax thresholds was needed to return extra taxes to taxpayers that the government was collecting through inflation.
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