Government critics are calling for fairer treatment after Finance Minister Bill English yesterday announced a rise in the Earthquake Commission levies from 5c per $100 to 15c per $100 for insured homeowners.
The levies will rise on February 1 next year to help build the commission's natural disaster fund and to more realistically reflect the commission's operating costs, Mr English said.
"The Government is committed to rebuilding Christchurch and supporting the people of Canterbury. The levy increase is a responsible step to ensure the commission can meet its long-term costs and continue to provide disaster cover around the rest of New Zealand in a sustainable way," he said.
Council of Trade Union economist Bill Rosenberg said the rise of insurance cover was just a tax to raise funds for the Government.
"The commission has insufficient funds to cover the Canterbury earthquakes, so the Government will have to find an estimated $1.2 billion from borrowing and the increased levy reduces that to $490 million."
There was no difference between that expenditure and all the other expenses required by the earthquakes, he said.
A much fairer way to raise funds to pay for the earthquake would be a special earthquake tax targeted at those who could most afford it.
Even with the tripled levy, it would take 30 years to rebuild the natural disaster fund.
Substantial rethinking needed to be done on many aspects of the commission in light of the earthquakes, Mr Rosenberg said.
Mr English said the change would increase annual levy revenue from about $86 million to about $260 million.
Raising levies for those who benefited from earthquake insurance cover was the fairest way to ensure the commission could meet its long-term costs.
He rejected calls for an earthquake tax to pay for the costs.
"This would mean that all taxpayers, regardless of whether they own a house or have insurance, would be subsidising insured homeowners who benefit from commission cover."
EQC hike
• Homeowner levies rise from 5c per $100 to 15c.
• Maximum rise from $69 a year to $207.
• Adds $2.65 a week to most homeowners' insurance.
• Critics say just a tax to raise Government funds.
