Planned fuel taxes may go

Meat and greet . . . National Party leader John Key minds the lamb at the Upper Clutha A and P...
Meat and greet . . . National Party leader John Key minds the lamb at the Upper Clutha A and P Show in Wanaka yesterday during heat one of the Glammies Awards. Photo by Stephen Jaquiery
The National Party would consider wiping Labour's plans for new fuel taxes if it came to power, leader John Key says.

Mr Key said yesterday proposed increases related to biofuels, regional petrol tax and the planned carbon emissions trading system could add up to 25c a litre to petrol next year, which was "too high for the average consumer to bear''.

National and Labour are under pressure to come up with answers for families battling a series of rising costs including.
- Price rises of up to $2 a litre for premium petrol.
- Floating mortgage interest rates above 10%.
- Basic foods such as butter, cheese and bread more than doubling in price in the past year.

However, both major parties yesterday ruled out quick fix measures such as cutting existing fuel taxes or dropping GST on foodstuffs, a measure advocated by organisers of a petition being circulated outside Auckland supermarkets.

Prime Minister Helen Clark yesterday acknowledged people were facing economic difficulties, but dropped few hints about what relief might be forthcoming in the May budget.

However, she did reject United Future leader Peter Dunne's call for income splitting, which she said favoured high income earners.

"Our concern right now has to be for those on low and modest incomes.''

The Prime Minister all but ruled out any changes to the GST system.

"We have an across-the-board system which is generally regarded as being simple to administer,'' she said.

"That means it is very low on complexity, which means it is low on compliance costs, so therefore there would be considerable reservation about changing it.''

A spokesman for Finance Minister Michael Cullen said fuel taxes were now fully dedicated to the transport budget, and certainty for future planning meant they needed to stay that way.

Changes to augment the Working For Families tax credits might be considered in the distant
future but a programme of sustainable personal tax cuts - to be unveiled in next month's Budget - were the Government's main priority.

Those tax cuts might potentially not come into effect until next year.

Mr Key said the current economic crisis had not been unexpected, and New Zealanders would have been better able to withstand bad times if the Government had introduced its proposed personal tax cuts years earlier.

He said a National government would cut taxes, do what it could to bring down interest rates, and improve economic productivity.

He rejected changes to GST, but said increases in fuel taxes planned by Labour would be reconsidered by National.

"One of the big issues with GST on food, for example, is while it's conceptually a nice idea it is difficult to implement,'' Mr Key said.

"It is fair to say we are taking a very close look at the proposed increases involved with biofuels and regional petrol tax and the implementation of the emissions trading system. They are potentially, if they all come in on April 1, 2009, as proposed, going to add 25c a litre to petrol.
I think that's just a cost that is too high for the average consumer to bear.''

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