Pain at the petrol pump

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Hawke's Bay motorists are bracing for another petrol price hike, with excise tax set to rise by nine cents a litre by July 2015.

The tax is set to rise by three cents a litre at the start of July and will continue to rise for the next two years.

Hastings' BP 2GO Racecourse owner Rod Earnshaw said that once the "political aspect" of the tax hike had died down most motorists probably would not even notice the increase.

"Prices on fuel move a lot anyway nowadays, once upon a time they didn't move much at all."

Frequent fuel discounting specials such as "thirsty Thursday" and supermarket fuel discount vouchers would likely offset any three cent rise, Mr Earnshaw said.

While some motorists would try to cut back on their vehicle usage, other areas of the household budget were usually sacrificed first as "people can't do without their cars".

As of yesterday, a litre of 91 octane was selling in Hawke's Bay from $2.019 (Caltex) to $2.089 (Z Energy).

The Customs and Excise (Budget Measures - Motor Spirits) Amendment Bill was announced by Finance Minister Bill English in December and passed under urgency on Saturday, by 67 votes to 26.

Under the legislation, the total tax take (including GST) from one litre of petrol will be almost $1 when the changes are fully implemented in July 2015.

The money raised is set to go into the Government's Land Transport Fund.

Transport Minister Gerry Brownlee told Parliament that, even following the increases, New Zealand would have the fifth lowest rate of petrol tax in the OECD.

A Transport Ministry official estimated the increase in excise tax would cost each driver an additional $45 annually.

Prime Minister John Key told TV One's Breakfast show yesterday the Government was receiving less tax revenue from motorists due to fuel efficiency improvements in modern vehicles.

Meanwhile, Green Party transport spokeswoman Julie Anne Genter said the tax take from motorists was down due to people using their cars less.

"It is absurd to use the revenue from the petrol tax hike to build more motorways when New Zealanders are switching to public transport.

"Public transport is where investment is needed."

AA PetrolWatch spokesman Mark Stockdale said an annual tax increase for fuel was not unusual.

"Usually the excise tax increases every year, in the past it's been about two cents per litre. It's a necessary evil and in part it's due to the Government boosting its transport infrastructure programme and also declining tax revenue over time because of improved fuel economy of the [national] fleet."

Unfortunately, the tax increase also penalised motorists on low incomes who could not afford to upgrade their vehicles and tended to own older, less fuel efficient cars, Mr Stockdale said.

However, it was likely most motorists would not notice the tax hike with the constant fluctuation of petrol prices.

Prices dropped 15 cents between March and May, only to rise again by four cents last Friday, Mr Stockdale said.

- Hawkes Bay Today

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