The Government is being called on to extend the duration of its recent fuel tax cut as petrol prices reach a new record.
The Government reduced fuel excise effectively by 29 cents a litre, on March 14 for three months.
But two months in and fuel prices are largely back to where they were, with the price of 91 now hitting a record $3.15 a litre and 98 at $3.40 a litre.
Energy Minister Megan Woods said the Government was continuing to monitor the situation, especially given the volatility in the global oil market.
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Just one month remains before a tax cut on fuel expires.
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She would not say what would happen at the end of the three-month period, or if the tax cut would be extended.
Transporting New Zealand chief executive Nick Leggett said volatility in the global fuel market looked set to be with us for some time yet.
As such he did not believe the Government could do anything but extend the discount in excise and road user charges for another three months.
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Transporting New Zealand chief executive Nick Leggett says it appreciates that the Government recognised the impact of rising fuel costs and took action.
The case for the discount remained, and the road transport industry would not appreciate a sharp increase in fuel costs, he said.
“It will appear arbitrary and without principle if it’s removed and those tax pressures are allowed to come flooding back.
“If the discount is removed with a sharp jolt, the people who ultimately will bear the brunt will be everyday Kiwis, who we know are having to deal with significant cost of living pressures already.”
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Gaspy co-founder Larry Green says the Government has painted itself into a corner with the tax cut.
Gaspy spokesman Larry Green said the tax break was effective, but the Government had painted itself into a corner.
“Putting the tax back on would be a massive own goal while the price remains so high,” Green said.
“Naively it would be nice to hope that further fuel taxes would be dropped but realistically transport infrastructure has to be paid for by something.”
He said he just paid $260 to fill up his Toyota Hilux with 91 octane.
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Waitomo managing director Jimmy Ormsby says inflationary pressure is being felt across the business.
“And that was the cheapest fuel available in my area.”
Waitomo Petroleum managing director Jimmy Ormsby said he understood the need for taxes to pay for public services, but he would like to see an extension of the tax cut, and less tax on fuel in the future.
“That’s relief for the Kiwi motorist ultimately.”
He said he had not been given any indication about what would happen when the three-month period expired.
If it did expire then one would expect the 29c excise tax cut to be reapplied, he said.
“You would expect the price of fuel to change by the same amount.”
Waitomo had to increase its prices recently because of the rising cost of crude oil, a weakening New Zealand dollar and inflationary pressure on operating costs, he said.
He said there was a “massive spread” of fuel prices in the market at the moment, and he encouraged motorists to shop around to find the cheapest price.
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ANZ economist Finn Robinson says fuel prices are a challenging issue for the Government because international forces are at play.
ANZ economist Finn Robinson said he had not seen any detail about how quickly the Government would reverse the fuel tax cut.
ANZ estimated that the tax cut would knock off half a percentage point off of inflation in the second quarter, he said.
If the tax was reapplied in one go it would cause a one-off increase to quarterly inflation but if it was reapplied in gradually then its impact on inflation may last a few quarters, he said.
He said extending it could be a possibility.
Weakness in the New Zealand dollar and continuing increases in oil prices was contributing to pain at the pump at the moment, he said.
He said fuel prices were a challenging situation for the Government especially at a time of high inflation.
“There is a lot of pressure out there to deal with it, and it’s not an easy challenge when so much of it is coming from global sources.”