Labour wanted petrol tax lowered

Press, Volume CXV, Issue 34031, 20 December 1975, Page 16

Labour wanted petrol tax lowered

(New Zealand Press Association) WELLINGTON, December 19. The Labour Administration recommended to the incoming National Government that petrol price increases be offset to an extent by a lowering of the petrol tax by 1.4 c a litre.

This was revealed by the Prime Minister (Mr Muldoon) today when he released a letter sent him on December 9 by the then Minister of Finance, Mr Tizard. The Labour Cabinet had considered on December 8 official recommendations on the level of prices needed to cover the four sources of higher prices for oil products, the letter said. “The combined effect would lead to an increase of 5c a litre for motor spirits, 4.7 c a litre for diesel oil, ! and 3.4 c a litre for fuel oil,” j it said. ■ CHANGE IN VALUE ■ The Cabinet had considered the undertaking given by the i Labour Government at the i time of the August, 1975, de- : valuation of the New Zealand ■ dollar that any necessary ad- : justment to the price of oil fuels resulting from this would be considered against the background of the tax levied. “It was assessed that the

change in value of the dollar had contributed 1.4 c a litre to the cost of motor spirits. “The Cabinet, in view of the revenue implications of this, was unwilling to make a public statement that the tax should be reduced by this amount, but indicates to the incoming Government that this undertaking to review the tax was given, and would have the effect now indicated.” The letter concluded with a Cabinet recommendation to Mr Muldoon that the price increases be offset by an amount of 1.4 c a litre in the petrol tax, with consequent adjustments for other fuels.

The Government last Monday increased the petrol price 5c a litre, and the price of diesel fuel 4.7 c, but did not reduce the petrol tax. In making public Mr Tizard’s letter, Mr Muldoon said it was clear that there was no decision by the Labour Government to reduce the level of tax ... “and indeed, in the light of the serious deterioration in the Government’s revenue position between August and December, it was quite impossible for any government to contemplate a further reduction in taxation which would simply have to be recouped in some other form,’’ he said. A deputation from the Motor Trade Association met the Minister of Trade and Industry (Mr Adams-Schnei-der) today to discuss an increase in the retailers’ margin on petrol sales. “I am sure the Government has no intention of adjusting the retail price,” said the

association’s executive director (Mr C. Stone) after the meeting. But an increase in the margin was expected next week. An adjustment would be made through the motor spirit pool account and not added to the pump price. Retailers now received 7|c for every gallon of petrol sold. This equals 6.11 c of the retail price. “How many retailers would want to sell goods at that margin?” Mr Stone asked.