KEY POINTS:
The Government has again ruled out cutting GST on petrol saying it wouldn't make any difference.
The Automobile Association, business groups and others have called for the move here while across the Tasman the Australian federal government has floated cutting GST on fuel excise - the so-called tax
on tax - which would save motorists just under four cents a litre there.
However, state governments which collect the GST are opposed to losing the revenue.
Here the move would save about 6c a litre and the Auckland Chamber of Commerce has said the Government has scored a $70 million windfall as petrol prices increased by about 29 per cent over the past two years.
Finance Minister Michael Cullen told reporters today that the Government did not collect more revenue overall when petrol prices were hiked as people reduced petrol use and spent less on other items.
"The Government is not collecting more GST, it's collecting the same amount of GST. It's just made up in a different way," he said.
He accepted dropping the tax on petrol would offer immediate relief but "something else" would have to give.
"Either we borrow more money and that costs the Government money, costs the taxpayers money, or we cut social services or we have to find other revenue from somewhere else, increase taxes in some other way.
"It looks like an answer but it's not actually an answer at all."
Prime Minister Helen Clark said GST was a comprehensive sales tax on everything and it was unwise to remove it in specific instances.
"The problem is you couldn't be guaranteed the price of petrol would actually fall as a result. It would be quite a tiny proportion of what people are seeing in volatility around petrol prices now."
Meanwhile, National Leader John Key said his party was unlikely to support any call for a cut in GST on petrol.
Mr Key said his preference was for wider tax relief through personal income tax cuts not tinkering with excise taxes.
Pricing inquiry
Commerce Minister Lianne Dalziel has announced a government inquiry into petrol pricing. She said yesterday the inquiry would give consumers greater certainty over how prices were set and could see changes in prices around the margins but did not expect great changes.
Independent consultants Hale and Twomey were appointed to review and analyse petrol pricing. The study would follow one by the Australian Competition and Consumer Commission (ACCC) into the price of unleaded petrol.
Dr Cullen was asked today about oil companies' behaviour.
"The fundamental drivers of cost are beyond the control in that sense, it's not that I think they are fiddling the price - there's always an issue about whether there's an excessively quick reaction (to put prices up)."
The inquiry would consider how prices were increased or decreased.
"Undoubtedly oil companies are making very large profits out of the stress and strain on ordinary households throughout the world," he said.
"The fundamental driver here is the actual price of oil and that's gone up an enormous amount over the last year... The reality is we are living in a world at the moment of very high oil prices and that's putting a lot of strain on household budgets."
- NZPA