Why Labour doesn’t add up, continued…
Topic is Consumer, Motoring, Politics, Your money by Brian Mackie | Print it |Here is a short lesson in basic arithmetic, for the benefit of Finance Minister Michael Cullen. It’s the sort of stuff they try to teach very young children.
If the pre-GST price of a litre of petrol is $2, the post-tax price is $2.25.
If you remove GST on fuel, the pump price is $2, saving 25c. Are you with us so far, Doc?
If the pre-GST price of a litre of petrol rises to $2.25, the post-tax price is $2.53. Notice the 3c bonus for Dr Cullen?
If GST has been removed on fuel, the pump price is $2.25, saving 28c. Still with us, Doc?
Dr Cullen refuses to consider abolishing GST on fuel, saying that oil price rises would “quickly wipe out the benefit.”
That is utter balderdash, plain and simple. If you abolish GST on fuel, the higher the oil price rises, the greater the tax relief for motorists – as well as for everyone else who factors transport costs into their business and is thereby forced to fuel inflation. Exactly the same inflationary principle of GST applies to groceries and the other basics of life.
This man either cannot do easy sums, or he is living in a parallel universe, or he really thinks that the rest of us are stupid. If he truly believes his own misleading propaganda, maybe it’s time for the ex-geography professor to go back to school. The infants’ school.
Tagged as Consumer, Finance-Minister, GST, inflation, Michael-Cullen, Motoring, petrol-prices, Politics, Your money


April 23rd, 2008 at 2:24 pm
Another question for the good doctor: what part of the tax component already in the “base price” of a litre of petrol constitutes a good or a service? That is to say, why are we paying GST on the various levies that have been added to the raw cost of the petrol in the first place? That surely violates whatever NZ’s equivalent of the Trades Description Act is.
April 23rd, 2008 at 2:46 pm
It also amounts to another case of at least double-taxation. We understand that at least 60c in every litre is accounted for by excise duty, on which Cullen exerts his GST. As the basic price rises, so does the excise duty, and so does the GST. Don’t try to work it out – it merely amounts to yet another escalating government rip-off. Instead, reach for the Nurofen…