Petrol boss: Tax would lead to fuel smuggling

The excise tax on petrol is rising from 48.5 to 50.5 cents per litre. Photo / AP

Regional fuel taxes would create a dangerous and illegal "smuggling" industry, discount supplier Gull Petroleum has warned the Auckland Council.

Mini-tankers would feed a raging black market by being filled with diesel outside Auckland and sent to makeshift depots around the city, and motorists would increase risks to themselves and others by loading cars with jerrycans of petrol bought outside the city, it says.

The council's economic consultants do not believe widespread imports of cheaper fuel will be cost-effective for most motorists.

But Gull's general manager, Dave Bodger, said yesterday they were being "naive optimists" if they believed that would not happen.

"They have obviously never been on a service station forecourt when fuel is being discounted," he said.

"Gull works in the real world - people will kill their grandmothers for 10c a litre [off normal prices]."

Mr Bodger said he was disappointed the council had not heeded two rounds of submissions from Gull against regional taxes as one option for bridging a $10 billion to $15 billion funding gap for transport projects including the underground city rail link.

Road tolls and heftier parking fees will also be investigated over the next year by a "consensus building group" in a bid by the council to foster public support for new revenue sources.

Last week, the council's transport committee voted 5-4 to endorse a study by the Ascari and Berl economic consultancies as ammunition against the Government's intention to repeal legislation which now provides for regions to raise their own fuel taxes.

The Government already has the right to veto specific schemes, as it did in 2009 when the former Auckland Regional Council wanted to take half of a proposed regional fuel tax of up to 9.5c a litre to pay for rail electrification.

A report by the consultancies said Auckland's boundaries were too distant from its main population centres for many motorists to make specific trips to fill up on cheaper fuel outside the reach of a regional fuel tax.

It said the vast majority of road trips in Auckland began and ended in the region, and it would cost about $5 for a car to travel 25km for a tankful of fuel for a saving of the same amount to avoid a fuel tax of 10c a litre.

The report acknowledged that some firms would consider fitting larger fuel tanks to trucks to bring more supplies to Auckland, and store them at depots in the region, or even move businesses to take advantage of lower prices.

"We are not able to comment on the extent to which these actions might eventuate in practice, except to say that monitoring would assist in deterring [some of those]."

But Mr Bodger said that although his company and the bigger oil suppliers would obey "the letter of the law", there was no doubt many other businesses would truck in supplies in mini-tankers and distribute them illegally.

"How are they going to enforce this?" he asked of the council.

"That's the really worrying thing - there's going to be a cottage industry developed for enforcement that will burn money.

"You are going to have more diesel sitting in trailer tanks that have been brought in from outside, so you've got the risk of spills, you've got the risk of fire.

"There will be a huge drive to put service stations in the wrong place - it is dangerous for people having extra diesel stored all over the place - it is just foolish."

Although acknowledging a new station Gull was building at Pukekohe could be hurt by a regional tax, Mr Bodger said the company also had an outlet on the Hauraki Plains which stood to be a big winner from drivers filling up with cheaper petrol on their way home to Auckland.