Labour against lower ACC levies for safer cars

Hamish Ruthrford at Stuff reports:

ACC is proposing to cut levies by more than $500 million next year, in what is effectively a tax cut, but workers on average wages with older cars will reap only a few dollars a week.

It’s not a tax cut, even though it is paid through the IRD. The purpose of ACC is to have levies high enough to meet the costs of accidents. It should and must lower levies if it can do so.

All car owners will be better off through lower licensing fees – frequently referred to as registration fees – although the savings are dependent upon safety.

Under a new system, cars will be split into four risk-based categories, with licensing costs dropping from less than $10 a year for the least safe group 1 cars, to more than $92 for the most safe, group 4 cars.

Excellent. Levies should reflect risk. This is the same principle as with employer levies where a manufacturing plant will pay higher levies than a supermarket.

Despite strong lobbying from riders that they were subsidising other road users, there will be no cut in licensing levies for motorcycles, with Rebstock saying in reality car owners already heavily subsidised the cost of supporting injured motorcycle riders.

“If we charged motorcycle owners the full cost of motorcyclists’ injuries, it would make owning and riding a bike unaffordable.”

We should charge the full cost. However as you can only drive one motorcycle at a time, the levy should be per driver not per motorcycle.

Labour’s ACC spokesman Iain Lees-Galloway said people on low incomes would be penalised by the proposed regime.

“The way to improve the safety of our vehicle fleet is to make sure people have enough money to buy safe cars, not by penalising them for being poor.”

So Labour is against lower levies for safer cars. How depressing.

Workers will also take home a fraction more in wages, with the earners’ levy proposed to drop by 22 cents for every $100 earned, or $22 for every $10,000 earned.

Those earning $50,000 will get another $110 a year, while those earning $150,000 will get $330 a year.

I’m not sure this is correct. The earners’ levy is $1.70 per $100 of income but is capped at $116,089. So a 22c reduction per $100 will be a maximum reduction of $255.

UPDATE: Also worth noting that ACC reviews the levies every year, as required to by law.  It’s coincidental that it is election year next year. This is an annual event.