Written By: - Date published: 9:49 am, June 9th, 2008 - 92 comments
Categories: economy, tax -
Tags: peak oil, petrol price
We regularly hear calls (not backed by any major party, including National) for the taxes on petrol to be lowered or removed because the prices are so high. After all, every time the price goes up, the government gets more revenue, doesn’t it?
No, it doesn’t. Tax on petrol has two parts. There are four levies totalling 50 cents a litre that pay for roading and the health costs of crashs. These are fixed amounts; they do not change when the price of petrol changes. But higher prices means that people are buying fewer litres of petrol now, so the government collects less revenue from these levies. Then, there is GST. The amount of GST collected from fuel rises with the retail price but when people have to spend extra on fuel they don’t buy something else and the government doesn’t get GST that lost sale. Overall, the amount of GST collected does not change because of the price of fuel. Less excise revenue, same GST, and, don’t forget, the government needs to buy fuel for tens of thousands of vehicles too. Rising petrol prices cost the government.
If the government did cut fuel taxes, it would create a massive hole in the budget. Every cent (and then some) of tax collected on fuel goes into roading costs. That money has to come from somewhere. And the decrease in retail price would soon be eaten up by further rises in the cost of crude.
Petrol tax is not the problem. Too much demand for oil and not enough supply is the problem. Artificially and temporarily lowering the price of petrol by removing taxes would only distort a clear market signal. That signal is: reduce demand, there’s not much oil left. If we bury our heads in the sand, continue demanding more and more oil and moaning for tax decreases, we only hasten the day when supply begins to plummet.
Peak oil is coming and no tinkering with taxes is going to change that.
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Scoopit!
“these people act right wing…”
How does this manifest itself?
“they espouse right wing…”
If they are saying the taxpayer should subsidise their business they are not espousing right wing.
“So for you being right wing is akin to a state of religious purity.”
You are trying to make me sound like a zealot. There are certain fundamental things you need to beleive in to be right wing. If you don’t beleive in them, you’re just not right wing. You’re something else.
“…it interests me that you are so disturbed by the reality of corporate welfare.”
How could you claim to be right wing and then demand the taxpayer subsidise your business? The most shameless advocate of corporate welfare in NZ is Jim Anderton. Does he act right wing?
“Come over to the left Billy!”
Do you get a minor household appliacne for every convert? How many more till you get the toasted sandwich maker? You all seem very nice, but I just don’t swing that way.
“You are trying to make me sound like a zealot. There are certain fundamental things you need to beleive in to be right wing. If you don’t beleive in them, you’re just not right wing. You’re something else.”
If at first r0b doesn’t succeed, he will attempt to label you as something people like him don’t like. Standard 101 for you, right there.
PS: r0b, I still don’t agree with Ian Wishart, but yes, I still want to know what a certain branch of government had to do at a certain place in the USA over a certain politician’s husband. How does that sit with the party line you’ve been fed as to how you should react to what I’ve said?
Dean
Urband legend I believe. There’s about as much truth in that rumour as some of the cak you read on this site about Key.
Did any one else hear about Obama’s Jerusalem gaffe ? Now that was a bigee !
“these people act right wing ‘
How does this manifest itself?
Mostly in the pursuit of capital gain.
If they are saying the taxpayer should subsidise their business they are not espousing right wing.
On this we will have to disagree, because it seems to me that right wingers often do this when things get sticky (when the market sends them signals that they don’t like!).
Do you get a minor household appliacne for every convert? How many more till you get the toasted sandwich maker?
Nothing so flash, just a set of steak knives. But if I had a set of steak knives I could start saving up for a steak!
You all seem very nice, but I just don’t swing that way.
Oh
BradBilly, you’ve wasted so much time already.Alright, since there’s no effort to reference the claim that:
Every cent (and then some) of tax collected on fuel goes into roading costs
I found the time to do Steve’s research for him. According to no less a source than Dr Cullen:
When this Government came into office only 42 per cent of fuel excise duty on petrol was retained in the National Land Transport Fund. Now the income flow is in the opposite direction.
Sounds good. So it’s all spent on roading costs then, Mike?
General taxation is now subsidising the restoration and extension of the rail network, the massive upgrading of the road system, and the largest increase in public transport expenditure in our history.
Ohhh… so the fuel levy and some of the money in the Consolidated Account is spent on roads and public transport and… paying over the odds for a clapped out rusty train set. Not quite the impression given by the statement that “every cent and then some” is spent on roads.
In fact if the excise were invested in straightening and improving many of NZ’s roads, not only would they be immeasurably safer but vehicles would use less fuel traversing them.
I haven’t been able to ascertain the relative proportions of fuel excise vs general taxes that make up this “transport pool”. Perhaps someone else can help with the figures?
“Did any one else hear about Obama’s Jerusalem gaffe ? Now that was a bigee !”
Shhh. Tony’s over there campaigning on his behalf. Obama says and does no wrong. It’s the mantra of the self confessed left.
Give it a few years and they’ll be denying he even said it to begin with.
“In fact if the excise were invested in straightening and improving many of NZ’s roads, not only would they be immeasurably safer but vehicles would use less fuel traversing them.”
To be fair, no government in NZ has ever done that.
But at least you and I know this.
Which is not at all what SP would have you believe, is it. Bloody facts. They always get in the way of a good party political broadcast when the chips are down.
Billy: How does this manifest itself?
r0b: Mostly in the pursuit of capital gain.
Being right wing isn’t about the pursuit of capital gain. You can be a greedy left-winger (I know some). In part it’s about self-reliance but that’s not the same thing.
Of course you can be a greedy lefty, but greedy righties are far more common.
But I’m interested Billy, since you reject bankers and property merchants and the pursuit of capital as characteristic of the label “right wing”, well then, just what does this label mean to you?
BTW, nice RHPS reference.
They don’t make them like RHPS any more. They really really don’t.
I first saw it at a semi-open screening where they were playing it over and over – I walked in on the last 15 minutes. Try making sense of that out of the blue! Heh.
Now I’m all nostalgic. iTunes, cue sound track…
“But I’m interested Billy, since you reject bankers and property merchants and the pursuit of capital as characteristic of the label “right wing’, well then, just what does this label mean to you?”
Obviously, something quite different to what it means to you.
At the very grave risk of reducing it to bumper-sticker glibness it’s about: self reliance, self-important busybodies (no matter how well intentioned) staying out of your life, the individual being in control of her own life, doing things that are bad for you if you really want to and if it’s rocking don’t bother knocking.
If being rich is important to you (and it seems to be for some people) being right wing allows you to do that. It’s not considered necessary, however.
Unfortunately, I get the sense that my second paragraph didn’t capture it adequately and that I will never get that waffle iron my supervisor has promised me.
I make my kids sing the hotdog song (“you’re a hotdog but you’d better not try to hurt her, Frankfurter”) before they get a frankfurter. They hate it. And yet, they banned smacking…
Strangely, this may be the first real personal detail I have offerred on this blog.
At the very grave risk of reducing it to bumper-sticker glibness
All I can manage at this time of night.
it’s about: self reliance, self-important busybodies (no matter how well intentioned) staying out of your life, the individual being in control of her own life
Ok, a libertarian then?
What happens to those that can’t take care of themselves in this world? Who builds the roads and the schools? Who stops people with guns taking whatever they want?
Unfortunately, I get the sense that my second paragraph didn’t capture it adequately and that I will never get that waffle iron my supervisor has promised me.
A waffle iron! Maybe I’m on the wrong side after all.
They hate it. And yet, they banned smacking
I’ll alert the 9th floor at once!
Strangely, this may be the first real personal detail I have offerred on this blog.
Thus RHPS brings out the best in all of us.
Strangely, this may be the first real personal detail I have offerred on this blog.
What about your incontinence and one-leggedness??? You mean you were lying to me??? Nooooooooooooo!!!!!!!!!!!!!!!!!
Oh well. Onward and upward. There’s a brand of leftness that pretty much ticks all of your boxes Billy-boy. And we ain’t interferin’ woolly liberals…
“There’s a brand of leftness that pretty much ticks all of your boxes Billy-boy. ”
I’m always willing to learn something new. What’s that, then?
Why the libertarian left of course. That’s where the state takes your taxes and provides for decent social welfare but fucks off out of your personal life. Kinda like your libertarianism but with difference being that security comes from health, education and general wellbeing rather than from police, defense and property rights. If you ever get around to reading Marx you’ll see the story ends with the withering of the state…
Come to think of it it’s kinda like the Greens way of doing things but without Kedgley and Locke. Oh but they piss me off…
don’t forget the druuuuugs…
don’t forget the druuuuugs
and that is relevant how ?
Robinsod
Piss you off maybe, but will they put you off voting the Green team ?
Libertarian left = a lot of drug law liberalisation, which I think would require some wellbeing ensured by police. yup