Local Tax On Petrol

Press, Volume CX, Issue 32210, 31 January 1970, Page 10

Local Tax On Petrol

Searching for fresh sources of local body revenue, the Auckland Regional Authority will soon consider proposals that have been put to it for local authority taxes on petrol and on hotel, motel, and boarding house accommodation. The proposal more likely to capture the interest of other local bodies, nearly all of which are concerned about the increasing burden on ratepayers, is the idea of a petrol tax. The idea is not new; but Mr L. N. Ross, who is advising the regional authority on the subject, speaks with more than ordinary knowledge of taxation. He was the chairman of the Taxation Review Committee, which presented its extensive report to the Government in 1967. Mr Ross would seem to prefer a widely-based indirect tax, applied to a number of items throughout the whole country. This has been discussed by many persons interested in local body finance; it has never been pressed far in New Zealand although local sales taxes are applied in other countries. In the United States, taxes based on property have long been considered inadequate and, in many respects, unfair; sales taxes are now the main source of revenue on most states and city authorities also rely heavily on sales taxes. Ideally, such taxes apply not to the basic essentials of life but to purchases on which people may exercise some discretion. To many people the question of whether petrol is an essential or a luxury item will be highly debatable; but there are special reasons for regarding petrol as an appropriate item for local taxation. Petrol sales, for the most part, are made in the areas in which the purchasers live and work. Tax revenue is’ therefore applied in the areas in which it is gathered. Furthermore, motorists are making very heavy demands upon the resources of county and municipal authorities and many ratepayers benefit only indirectly from the reading improvements that are a constant drain on their rates. Mr Ross has suggested a tax at the rate of 1 cent a gallon on all petrol sales and the $770,000 that he estimates would be yielded in the Auckland area is presumably in line with the authority’s requirements.

Any additional tax would provoke an outcry 1 from motorists, most -of whom believe they are 1 already taxed quite heavily enough. They are paying • 14.8 cents a gallon to the National Roads Fund and a further 3.3 cents per gallon in motor spirits tax— of which all but 1 cent a gallon is now credited to the National Roads Board. It is conceivable that i the Government might be persuaded to forgo the 1 1 cent a gallon it retains for the general revenue | and to permit local councils to collect this sum in ! their own areas. But whether the local tax would i mean higher petrol prices or not the revenue that 1 would be collected from this tax is worth looking 1 at in relation to total receipts of local authorities. ’ The city, borough, and county councils throughout i the country are now collecting at least $BO million 1 a year in rates. Their total annual income—from ] rates, licence fees, rents, sales and services, Govern- ’ ment grants and subsidies, and loan money—is t nearly $3OO million. Local levies on petrol at the < rate of 1 cent a gallon throughout the country would 1 yield about $4 million a year at the present rate of j petrol sales. Considering the increases that coun-j cils have had to make in their rating levels in recent ■ years the addition of $4 million a year is not very ’ impressive. The unhappy conclusion motorists will, have to draw if petrol sales are ever deemed ripe for local taxation is that the tax will have to be more than 1 cent a gallon. Daunting as the thought of the motorists’ objections might be, both central and local government will have to face up to overhauling the sources of local revenue. Other sources of local body revenue are urgently needed.