All motorists will pay the Auckland fuel tax

Hamish Rutherford writes:

When the Government signalled plans to introduce a special fuel tax in Auckland, transport officials warned Transport Minister Phil Twyford that such a measure had been tried before and failed. At least twice.

For all the good intention – that motorists benefiting from major transport projects pay their share – there is little that can be done to prevent the impact of the tax increase spreading across the country.

This is key. The petrol companies may well treat the 11.5 cents a litre extra tax in Auckland as a sunk cost and charge four cents a litre more nationwide.

But there are signs that rather than spilling over when the tax comes into force, that the sharp price increase in recent weeks could be price spreading in anticipation of the price increase.

Yep once a future cost is known, it is often factored in early.

This has all happened before, suggesting Governments never learn.

During the early 1990s, New Zealand had a regional fuel tax, but it was abandoned as the impact spread across New Zealand.

The Government passed legislation for another regional tax in 2008, but never introduced it because of fears of price spreading.

We know this because it is contained in a very clear warning to Twyford about what could happen to his increase.

So this is known, but the Government ignores it. Motorists in Invercargill, Napier and Palmerston North will be paying more for their driving, in order to fund light rail in Auckland.

But given how stark the warnings were, the regional fuel tax simply looks dishonest. The Government should admit it will not work, replace the regional tax with a smaller nationwide one and drop the charade.

Will they listen?