A 40 PER CENT. PETROL TAX INCREASE

Dominion, Volume 32, Issue 261, 2 August 1939, Page 8

A 40 PER CENT. PETROL TAX INCREASE

In estimating that the petrol tax increase of from lOd. to 1/2 a gallon (or 40 per cent.) will yield another *1,000,000 of revenue, the Acting-Minister of Finance has provided himself with a generous margin. In 1938 the net yield on petrol taxation was *3,808,749 and an increase of 40 per cent, based on that figure would produce more than *1,500,000 extra. The difference of half a million odd provides against a substantial drop in petrol consumption. Well it may, for the added imposition is the heaviest that the trade and motor-vehicle users of this country have ever been called upon to face, and it is inevitable that private motorists will economize. When the petrol tax was introduced in 1928 the rate was 4d. a gallon, so that the Labour Government has confronted the community with an increase equal to the whole amount of the original tax. The levy became 6d. a gallon in 1930, Bd. a gallon in October, 1931, and lOd. a gallon as from February 9, 1933. It will remain to be seen how prices will be adjusted to meet the new position, but assuming that the tax increase is simply passed on to the consumer, the trade cannot escape loss by reduction in turnover, while resellers (at the Wellington fixed price) will be left with their profit of 3d. on 2/3 and 2/4 instead of on 1/11 and 2/- as at present—this on a turnover which will be appreciably reduced, especially in the case of petrol stations catering largely for private owners. The public in general and workers in particular will be calleo upon to share the additional lev}', for it is not to be expected that, motor transport operators can meet the tax without an adjustment of fares. Today the public is dependent upon motor transport in so wide a range of activities, that the petrol tax is a tax on a necessity, and one which all must share in some degree. The increased tax, furthermore, is a direct addition to farmers’ costs, particularly the costs of dairy-farming. Only the consumer of petrol as a hixiiiy is able to lessen the burden of the tax by the more sparing use of his