Taxing times

This really is a taxing government:

The Government’s biofuel mandate will be another cost that will see motorists paying twice at the pump for carbon emissions, National’s Transport spokesperson Simeon Brown says.

“Every litre of fuel Kiwis use already faces an 18 cent cost under the existing Emissions Trading Scheme. Adding a biofuel mandate on top of that will simply be another cost for the same outcome already being achieved by the ETS.

“MBIE stated that the introduction of the biofuel mandate will increase the price of petrol by 0.4 cents per litre, diesel by 7.1 cents per litre, and jet fuel by 7.1 cents per litre (or 11.2 per cent).

“Overall, it is estimated the economic cost of the policy will be over $1.2 billion. Yet as New Zealand already has a cap on our emissions, there will be no reduction in New Zealand’s total emissions.

“Essentially, this is a policy to make it more expensive for New Zealand to achieve emissions reduction targets, and to make petrol and diesel more expensive at the pump.

“At a time when Kiwis are paying more for petrol at the pump than ever before, the Government needs to grant relief to motorists by removing the Auckland regional fuel tax at a minimum.

“The mandate will be particularly hard for farmers who are already facing the introduction of the new ute tax, as the biofuel mandate could increase the price of diesel by 7 cents per litre.

“While National is supportive of biofuels and reducing our carbon emissions, the Government cannot double dip into Kiwis’ pockets by taxing them through the ETS and the biofuel mandate.”

The taxing doesn’t stop at the petrol pump:

Grant Robertson is riding inflation to execute an unjustifiable tax grab, says the New Zealand Taxpayers’ Union in response to today’s Half Year Economic and Fiscal Update.

Speaking from the HYEFU Treasury lock-up, Union spokesman Louis Houlbrooke, “The Government is set to increase its tax take by an extra $7 billion each year for the next five years. That’s perverse in the context of a pandemic that has left businesses reeling and households facing rising living costs. New Zealanders deserve tax relief, but Grant Robertson seems proud to be taking more and more.”

“A major cause of Grant Robertson’s revenue bonanza is inflation, which is now forecast to hit 5.6% next year. Inflation this high should be intolerable – there’s a reason the Reserve Bank targets 1-3%. But rising living costs are made even more painful by the Government’s refusal to adjust income tax brackets to keep up.”

“Someone on the average salary ($58,836) is set to pay an extra $955 in income tax next year, assuming they’re lucky enough to get an inflation-level pay rise. Of course, their real pre-tax buying power will be no higher, so eitherway everyone is left poorer.”

“In response to a question from Brad Olsen of Infometrics, Grant Robertson flatly ruled out the adjustment of income tax brackets, and made no apology for his Government’s contribution to inflation via massive spending.”

“Tax brackets haven’t been adjusted for a decade. National and Labour might have thought taxpayers wouldn’t notice slow, inflation-driving tax creep, but with inflation curving up, the elephant in the room is now impossible to ignore.

“Taxpayers need relief from the corrosive effect of inflation. Grant Robertson’s refusal to acknowledge this is cruel.”

The government’s refusal to adjust income tax brackets adds more tax insults to the other taxing injuries it is inflicting on us:

Today’s Half Year Economic and Fiscal Update (HYEFU) confirms that despite a hot economy where everyone is competing for scarce labour and resources, Finance Minister Grant Robertson isn’t easing off his big debt-funded spend up and that will fuel inflation and hurt Kiwis, National’s Finance spokesperson Simon Bridges says.

“Improved macro fiscals like a higher tax take and lower expected net core Crown debt are all well and good, but that doesn’t wash with Kiwi families who are being burnt by price rises that far outstrip wage increases.

“Core government spending is forecast to run a whopping 68% higher since Labour took office this year. The HYEFU reforecast shows government spending remaining high even post-Covid.

“While elevated spending levels were appropriate through much of the pandemic, many economists and the likes of the Reserve Bank now confirm its an overheating economic picture where adjustments and some easing off is required. Otherwise Labour is just outbidding private players for land, building supplies, and motel rooms, and forcing prices up across the board.

“Not all spending is good investment and you can have too much of a good thing. What’s more, an awful lot of it is being funded by borrowing, which means it has to be paid back eventually.

“The real kicker though is that this spending is pushing inflation higher and that in turn is forcing the Reserve Bank to keep hiking up interest rates. More than half our inflation is from the non-tradables sector and so home grown, and at 4.9 per cent its growing faster than it has in over 30 years, much faster than in Australia (3 per cent), and much faster than wages at 2.4 per cent.

“Inflation is literally taking money out of Kiwis’ pockets and making us poorer. Whether it’s the mum at the supermarket, the tradie at the petrol station or the young person trying to buy a first home, inflation is making things much, much harder.

“With all Grant’s spending, it’s up to the Reserve Bank to come to the rescue, pushing interest rates higher than they might otherwise need to go.

“We are saying ‘rein it in a bit Minister’. Take off some of the pressure on inflation and interest rates and give Kiwis an economic fair go. Your hot economy is burning us.”

Inflation is theft – it steals the real value of money including wages and savings.

The government’s low value spending is adding fuel to the inflationary fire and the increase in interest rates that will follow will turn up the heat even more.

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