Fuel crisis: Nicola Willis slams Chris Hipkins’ ‘factually unbased claims’ over Govt’s tax take

Finance Minister Nicola Willis is dismissing claims from Labour leader Chris Hipkins that the Government is receiving “hundreds of millions of dollars” in extra tax amid higher fuel prices as “factually unbased” and “disappointing”.

Hipkins, speaking to Ryan Bridge TODAY this morning, claimed the Government was “literally raking in hundreds of millions of dollars extra because of the increase in fuel prices”.

Acknowledging the Government’s impending support package set to be announced today, Hipkins urged the Government to utilise its tax revenue to assist people struggling with high costs at the pump.

Willis, speaking ahead of her party’s caucus meeting, told reporters that advice she’d received indicated the Government would not receive any additional tax revenue.

“The fuel tax take is a fixed amount, it doesn’t rise with the increasing rise of petrol.

“In terms of GST, while theoretically that does proportionately rise, it is likely to be offset by reduced use of fuel, but also reduced spending elsewhere in the economy as Kiwis adjust their budgets.

“Put it this way, as Minister of Finance, I’ve certainly not been advised that I’ll be getting windfall tax gains out of the current global crisis, in fact, I’ve been told to brace myself for the opposite, which is that this is likely to reduce Government revenue.”

Willis said she had been “disappointed” by Hipkins’ “factually unbased claims”.

“I think it’s really disappointing to see the leader of the Opposition grabbing what is a fair question but then providing Kiwis with misleading information. This is a time for cool, calm heads.”

Hipkins, speaking to reporters after Willis, wouldn’t walk back his earlier comments and argued that the Government would receive millions extra in GST revenue.

He calculated that if fuel prices increase $1 a litre, it would result in an extra $3m a day in GST revenue.

His reference to hundreds of millions extra was based on a briefing from officials suggesting higher fuel prices could persist for months.

“So if you take 100 days, that’s $300 million,” he said.

However, Hipkins wasn’t clear when asked if GST revenue would reduce as people pulled back on other expenses.

He insisted people were unlikely to reduce their fuel consumption.

“We know that demand for fuel is relatively inelastic, so that’s extra money that’s coming into the Government because people don’t have a choice but to fill up the car.”

Adam Pearse is the Deputy Political Editor and part of the NZ Herald’s Press Gallery team based at Parliament in Wellington. He has worked for NZME since 2018, reporting for the Northern Advocate in Whangārei and the Herald in Auckland.