Petrol Tax Relief

National has announced further tax relief today – a temporary reduction in the petrol tax by 5c a litre. This will take effect on 1 October 2005 and last until 1 April 2006, when National’s tax cuts will take effect.

The $100 million cost, will not be funded by reducing investment into roading, but out of the extra GST which has been collected due to the record high price of petrol. The net fiscal impact will be negligible.

The bottom line is that the Government has stood to gain almost $100 million more in GST over the next six months from the high petrol prices, so rather than invent loopy ways to spend it, National will give it back through reducing the petrol tax.

Filling up a large car now costs almost $100. Of that $100, 42% is made up of government taxes.