'BBQ' tax on bottled gas to pay for roads put on hold

Embarrassed Government officials are postponing instructions to service stations which could have forced householders buying bottled gas for cooking or heating to pay taxes for roads.

Retailers were mystified to receive a letter sent from Land Transport NZ late last week implying they could no longer claim excise rebates for liquefied petroleum gas or LPG sold for non-automotive purposes.

They were left wondering if the Government was planning some form of barbecue tax.

The letter said only "end users" could claim rebates from July 1, and it did not include householders in a list of those exempted from paying fuel excise on LPG.

Taken on face value, that meant people refilling gas bottles for kitchens, barbecues or home-heating may have faced a mid-winter price rise of about $2 on 9 kg of fuel now costing anything from $14 to $18.

But Land Transport late yesterday rushed out a second letter saying it was extending a review of tax collection procedures and wanted to consult "more fully" with the industry before implementing changes.

"The first stage of the review concentrated on an anomaly in procedures, the second phase will focus on individual claims rather than legislative compliance," wrote Land Transport director Wayne Donnelly.

"We apologise for any inconvenience and will come back to you with further updates as soon as possible."

The second letter follows a press release issued late on Tuesday in which Secretary for Transport Robin Dunlop said indications showed there may be some anomalies in procedures and that some changes may need to be made in the future.

Dr Dunlop told the Herald yesterday that the initial letter was withdrawn "because we have no proof there is any problem at this present time".

Asked what prompted the review in the first place, he said it was just a routine exercise which found that some refunds being applied for seemed to be "a bit strange".

"We just want to make sure they are right," he said, without going into details.

"It wasn't about trying to put taxes up - we just wanted to make sure the right people were claiming it."

Dr Dunlop stopped short of giving an assurance that buyers of LPG for domestic use would not end up having to pay fuel excise now collected only from road users, saying he could not do that until the review was completed, hopefully by the end of July.

LPG Association executive director Peter Gilbert said he did not think for a moment that the Government would try to collect taxes for roads from domestic users, but he was having difficulty seeking clarification from officials.

A Land Transport fact sheet says excise refunds can be claimed for fuel used in exempted vehicles and those for which road user charges are paid, or for non-automotive commercial purposes.

Although domestic purposes are not included in the list of exemptions, Mr Gilbert said service stations and other retailers had until the early 1990s been entitled to claim rebates as users of fuel for commercial purposes.

That meant they did not pass on the tax to non-automotive customers.

Mr Gilbert said it would be quite unwieldy for individual householders to claim rebates, and he could not see it happening.

"They couldn't cope with every Mr and Mrs Smith claiming back excise rebates," he said.

He expressed disappointment that his association had not yet been consulted about the review, and called for that to happen without delay.