NEW PETROL TAX

Nelson Evening Mail, Volume LXVI, 13 February 1933, Page 3

NEW PETROL TAX

ADDITIONAL HEAVY BURDEN STRONG PROTEST BY MOTORISTS’ ORGANISATIONS LETTER. TO THE RT. HON. J. G. COATES ’ A letter of protest against the imposition of a further tax on petrol has been sent to the lit. lion. .J. I>. Coates, Minister of Finance and Customs, by the North Island and South Island Motor Unions. The letter, which is signed by thi> respective presidents (Mr W. A. O’Callaghan and Mr F. W. Johnson) is as follows We cannot understand why motorists should be singled out for taxation, confiscatory in its extent and grossly inequitable in its application. Tlie ad valorem percentage of taxation is staggering ! The Gulf price of petrol to-day is 4.45 cents per Imperial gallon, which converted at 3.38 equals 3.15 pence per gallon. The position is, therefore : Gulf Price 3.15 pence. Old Tax , 8 Primage 4 New Tax 3 Primage 16 15% extra. Exchange which is a direct tax on Petrol based on c.i.f. cost, N.Z. .9 Total taxation 12.45 pence. Petrol, therefore, is now subject to the amazing impost of 400 per cent, ad valorem, Compare this with any .other item on the Customs schedule and you will see the extraordinary onslaught that has been made on the motor vehicle owners’ pocket. It passes our comprehension that whereas such commodities as whisky (180 per cent.), confectionery )61 per cent.), cigars (120 per cent.), tobacco (170 per cent.), are subject to the ad valorem duties mentioned, petrol should he singled out for such extortionate taxation.

Another matter which has not escaped our notice, hut it seems must have been entirely overlooked by tlie Government, is that motor taxation has been increased between 1924 and 1932 by 600 per cent., and now you have added a- further 3d per gallon to petrol, tlie increase for next year may safely be said to he not less than 820 per cent. We cannot think of one argument which could even in the least degree warrant such wholesale and oppressive taxation upon one class of tlie community.

Petrol consumption has dropped during the last two years, and we feel that the, law of diminishing returns will operate at an accelerated rate, duo to this further taxation. For example, 2d tax was put on in 1930, and the following year sales dropped by 6,000,000 gallons, as against the normal increase the previous year of 6,000,000. Tn 1931 still another 2d was added and sales dropped a further 5,000,000 gallons. We have, already said that we object to the oppressive and unjust nature of tlie new taxation, and we, suggest it should he dropped and the following avenues explored : . . (a) The Government obviously has determined on the imposition of a sales tax and wo think you should he reminded that in Australia the actual return from the Sales Tax exceeded the estimate by £2,000,000 and, therefore, it is reasonable to suppose that a similar result will he attained in New Zealand. (b) We suggest that instead of bleeding the taxpayer white to meet next year’s Government commitments in London, the Government could relieve the taxpayer by borrowing a proportion of its requirements in London, thereby spreading the hui’den of repayment and at the, same time avoiding the present additional cost of settlement due to tlie 25 per cent, rate of exchange. (e) That to relieve the unemployment situation a comprehensively planned raiding scheme he put into operation, and say £1,000,000 of the Unemployment Board’s money transferred to the Main Highways Board and used for the purpose. This would result in work of permanent value being done and in useful employment being provided for a large number of men. In planning the road work the Highways Board must bear in mind the undertaking of works likely to absorb the maximum number of men. Further, this • will enable advantage to he taken of the county organisations in the country and of the Highways Board’s staff, which is specially trained for the work. (d) That the possibility of reducing the national interest burden by a conversion scheme he examined. (e) A tax on local body trading and power boards should he considered, because apart from equities such a tax would be spread equitably. The tax would require to be on the capital invested because otherwise it would be evaded by reductions in charges for the services. This would yield £500,000.

Another matter that must not be lost sight of is that, this new tax places a heavy burden upon all commercial transport in the country. It will react against farmers, market gardeners, carriers, passenger vehicle owners and users, and all road goods and produce services, and will inevitably result in a large accretion to tlie ranks of tlie unemployed. We feel that wo are entitled to observe that in tlie past we have done everything in our power to assist you, and our helpful attitude has been acknowledged by the Government.

Last year and tlie year before we accepted your financial proposals, and with great difficulty prevailed upon our members through our organisations to do likewise. To-day, however, we cannot pursue the same policy, because advantage has been taken of our previous helpful attitude, and tlie present tax is so inequitable that our duty to our members demands that we now take an entirely different stand. If we failed to oppose your new taxation no argument that -could he advanced would justify our action to our members, and not only arc we not justified in attempting to pacify our members and gel them to accept the additional burden, but that any such attempt would he hopeigps. Retro] is an essential business commodity, and it seems to us incomprehensible that the Government should persist with a manifestly unfair imposition, which must alienate and antagonise not only our 55,000 members, but all persons engaged in road transport in this country.