The Press TUESDAY, AUGUST 13, 1974 Taxing the motorist

Press, Volume CXIV, Issue 33611, 13 August 1974, Page 12

The Press TUESDAY, AUGUST 13, 1974 Taxing the motorist

The motorist makes heavy demands on New Zealand s overseas exchange earnings: his car is imported — either “ built-up ” or “ completely knocked-down (for local assembly) — and so is the oil from which his petrol is produced at the New Zealand refinery. During the present balance-of-payments difficulties — brought on partly by higher prices for oil — the motorist can expect to pay dearly for his transport. He is already paying more for petrol than before the oil crisis: and now he will pay a lot more for any of the bigger cars, but slightly less for a smaller car. Yet the effectiveness of the change in sales taxes on cars announced by the Government last week may be doubted. Designed to persuade more motorists to buy smaller cars, the measure will certainly strengthen the demand for small cars — most of them already in short supply. Motor assemblers and distributors will need many months to achieve the new balance between large and small cars desired by the Government. A more immediate reduction in petrol consumption could surely have been brought about by an extra tax on petrol. The tax could have been supplemented, if necessary, by an increase in the initial registration fee for vehicles of large engine capacity. These measures would have given the motor assembly industry a nudge in the same direction as the more cumbersome changes in sales tax pushed it last week. They would also have enabled the Government to provide more equitably for minorities penalised by the higher sales tax on large cars, such as fanners and parents of large families. And the charge of discrimination against Australia — New Zealand’s major supplier of components for six-cylinder cars, and New Zealand’s partner in the New Zealand-Australia Free Trade Agreement — would have been avoided. All things considered, the new scale of sales tax is probably less equitable and less efficient than alternative methods of reducing the country’s expenditure on motoring.