Government claims wrong, Wilson concedes that fuel tax is regressive

Increasing fuel taxes impact more on people on lower incomes who rely on a car for transport.

On Thursday in the Herald Simon Wilson wrote what looked like virtual Government media release- $5.77: The extra amount Aucklanders will pay for fuel every week, according to Transport Minister Phil Twyford

Finance Minister Grant Robertson will join Transport Minister Phil Twyford and Associate Transport Minister Julie-Anne Genter this afternoon in Auckland to reveal the details of the new excise levies on fuel.

But it looked like they had already revealed the details to Wilson.

By late 2020, new fuel taxes will mean Aucklanders are paying an average $5.77 more a week for petrol, according to figures to be released by Government ministers today.

And in a startling revelation, the ministers claim that the wealthier a household is, the more it is likely to pay for petrol. They say the wealthiest 10 per cent of households will pay $7.71 per week more for petrol. Those with the lowest incomes will pay $3.64 a week more.

That is a quite misleading use of averages. A much bigger proportion of lower income people don’t use cars, for example many students. This distorts the averages.

This is a complete reversal of the most common complaint about fuel taxes, which is that they are “regressive”. That means, the critics say, they affect poor people more than wealthy people.

Opponents of the new fuel taxes, including several councillors and the National Party Opposition in Parliament, have argued that low-income people rely more on their cars than wealthy people. They also say those on low incomes have less access to public transport and drive cars that are larger and less fuel-efficient.

But the Government’s figures starkly reject that view.

But this view was strongly debunked in social media.

David Farrar at Kiwiblog: Not a startling revelation

The data is not a reversal of the complaint about the fuel tax. In fact it proves the complaint.  Let’s look at the definition of regressive:

(of a tax) taking a proportionally greater amount from those on lower incomes.

Now let’s look at the average incomes for each decile

  • Decile 1 – under $23,900
  • Decile 5 – $64,400 to $80,199
  • Decile 10 – over $188,900

So the extra fuel tax as a percentage of income is:

  • Decile 1: 0.52%
  • Decile 5: 0.27%
  • Decile 10: 0.14%

So the article proves the exact opposite of what it claims – that the increase in fuel tax is regressive as it hits lower income households more.

It was also covered by @Economissive on Twitter:

I have some other work I must get done today, but once that’s out of the way I am going to do what Simon Wilson never does and that’s fact check this appallingly bad analysis by the Ministry of Transport and proudly supported by the Minister.

Here’s the big thing the , and have missed: many low-income people don’t own cars.

Students are low income. How many of them own cars? What proportion as compared to say rich professionals? Students generally live near uni and work. They walk or bike or take the bus.

What matters is how much households with cars pay! And the Ministry, Minister and Wilson haven’t provided that data!

THE POOR PAY MORE FOR EACH KILOMETRE. I can’t say this more clearly enough. And have said so for months and months. It is a regressive charge.

Wilson copped a lot of flak on Twitter for his claims (and his acting as an uninquiring repeater for the Government). Last night he conceded:

Hi does  say so today at the hHerald, but it is buried in another Government friendly article – The fuss about fuel taxes and the next big transport debate

He starts by quoting a councillor. Then he rephrases his ‘wealthy people pay more for fuel than poor people’ averages spiel.

What will wealthier people pay? On average per household, they drive more, and as the pump prices suggest, they probably pay more for their petrol too. The wealthiest third of households will face an average fuel price rise at least double that of the poorest.

That might come as a surprise to anyone used to hearing that “fuel taxes hurt the poorest more”, but it shouldn’t. Wealthy people spend more on almost everything.

He follows that with an admission rising fuel taxes will hit poorer people more.

Despite that, however, it is true that these fuel taxes will hurt low-income households more. Low-income households spend a bigger proportion of their money on essentials, including transport costs. So every price rise eats into their disposable income, assuming they even have any.

Wealthier people might not notice having to spend $5 or more a week of something. But many others have to count every penny.

Another factor: people in poorer households are more likely to use public transport, thus not paying for petrol at all. Those who do drive may be travelling further than many wealthier people, and in less fuel-efficient cars too.

And what often happens to the cost of public transport when the cost of fuel rises?

Then Wilson’s brief regression concession.

I wrote earlier this week that the fuel price rises are not regressive. That was wrong. Wealthier people will pay more overall but this will impact them less. The fuel taxes are flat taxes: we all pay the same per litre. And all flat taxes are regressive, for the reasons just outlined.

He then seemed to switch back to promoting Government PR:

On Thursday, finance minister Grant Robertson put the fuel price rises in the context of other changes the Government is making to household incomes. The minimum wage is rising. The Families Package includes a winter energy payment for the elderly and some others on benefits, a means-tested payment for babies and changes to lower-income family tax credits. All of these changes come into effect from July 1, the same day as the council’s regional fuel tax.

Robertson said hundreds of thousands of families would be $75 a week better off, on average, by 2020/21 when the Working for Families measures have been fully implemented. That’s far more cash in hand than the fuel taxes will take away.

But this time Wilson questioned it.

That’s true, but those measures also compensate for many costs facing lower-income families, especially as the Government is not introducing the tax cuts promised by the previous Government.

What he and Robertson didn’t mention is that, while people with families will get more money again from the Government, people without dependant children don’t get Working for Families. And many low income workers have been getting low wage increases for years, and that looks unlikely to change markedly for many.

All income earners are slowly paying higher rates of income tax – the last Government belatedly addressed this by lowering tax rates, but the Labour led Government quickly scrapped them.

I won’t get anything from the above mentioned financial benefits, and neither will many people. Fortunately for me I won’t get the fuel price increase that is being introduced in Auckland, just the smaller country-wide excise tax increase.

And I am an average earner so that won’t impact much. Thinks will get tougher for low income workers in Auckland who don’t have dependent children but who rely on a car for transport, especially if it’s an older less efficient car. Transport owner operators will also have to contend with rising fuel expenses.

Wilson:

All of which points to a hidden issue in all this: what public transport improvements will really make a difference? Should buses and trains be cheaper or more frequent? And why can’t we have both? Lets argue about that.

That’s a bit of a diversion from his repeating for the Government. Perhaps he could look at another hidden issue, the growing divide between workers with families and workers with no dependant children.

What is happening, and it has been for some time, is that workers without children are gradually getting worse off, and there is no sign of that changing.

42 Comments

  1. chrism56

     /  June 30, 2018

    Does this mean Simon Wilson is a purveyor of “FAKE NEWS” – oh, the irony.
    Yet more proof of why the Government and its group of friendly reporters have lost credibility. He probably gets his information from Clare Curran.

  2. Trevors_Elbow

     /  June 30, 2018

    I think Simon has been Fisked and he didn’t like it one little bit….

    Now for me this is a serious issue when a industry veteran has put out such a dodgy piece with little journalistic fact checking rigour…. he has been forced to walk it back, but if there were no blogs and social media peps fact checking him would he have EVER acknowledged it was a crap piece of writing/analysis?

    This is why the establish media outlets, stocked with writing bods like Simon Wilson, are so distrusted by anyone who takes even a passing interest in events…

    • Traveller

       /  June 30, 2018

      It’s quite a bizarre thing that Mr Wilson, nothing but a living, breathing billboard for all things Labour Party, is given the editorial freedom to push his constant stream of Labour propaganda. The broader lack of analysis and investigative reporting in NZ points to not just the weak academics of the Tech Institutes they largely come out of, but to a developing lazy clubbiness and a “my brand” Social Media focus. I wonder where we’d be were it not for the various blogs.

      One good thing is that “Labour must control the narrative” Clare Curran and her dreams of having John Campbell disseminating LP propaganada through RNZ has been dealt a further blow by his departure. She and Thompson won’t find Espiner anywhere near as keen in painting by numbers with the pink tinges she’d hoped Campbell would do for her.

      • Blazer

         /  June 30, 2018

        rubbish,but well written rubbish,nevertheless,that omits the frontline blue MSM line of Young,Trevett,Roughan,etc,etc who do not understand impartiality and have never heard of an apolitical…treatise.

        • Roughan the only one there who’s reliably centrist. You’ll find Trevett pretty evenhanded.

          Even if you included Trevett blazer, 2 against the vast liberal rest of ‘em ain’t a fair weighting.

          • duperez

             /  June 30, 2018

            You do think it’s quite nice that the same company provides us with Mr Wilson and Mr Hosking don’t you? All in the spirit of being living, breathing billboards for whatever they want of course.

  3. Gezza

     /  June 30, 2018

    Here’s the big thing the @motnz, @PhilTwyford and @simonbwilson have missed: many low-income people don’t own cars.

    Straight away you know there’s going to be a problem with the information, because everybody knows that Phil Twyford is a fucking idiot. Even Labour’s Speaker.

  4. PartisanZ

     /  June 30, 2018

    The math is way too complicated for me …

    Easier to just pay Tolls eh?

    I wonder what the Toll would have been on that East-West Link @ $368 million per km?

    Plenty of alternative routes … Poor people can get stuck in traffic and use more fuel.

    If you’re poor and already driving long distance to work you’re already fuel disadvantaged, surely? Why not trade up, across or down to a more economical vehicle? Save $12 per week on fuel and spend $10 extra on car finance?

    Is this an example of more socialized user-pays, Fuel Tax? As opposed to more privatized user pays, Toll Roads …?

    • PDB

       /  June 30, 2018

      PZ: “The math is way too complicated for me …”

      Anything dealing in straight-forward factual information is likely to have that effect on you.

      PZ: “Plenty of alternative routes … Poor people can get stuck in traffic and use more fuel.”

      If the toll road is implemented correctly (with appropriate time benefits and at the right price point) then alternative routes (many of which they would be using already prior to the toll road being built) become less congested and therefore people not using the toll road will use less fuel than usual – the complete opposite to what you’re saying.

      • PartisanZ

         /  June 30, 2018

        What you say is a possibility … (not about my ability to comprehend factual information)

        And the government – or should I say taxpayer – has to maintain two roads instead of one …

        • PDB

           /  June 30, 2018

          Maybe they could scrub out the earlier one along with all the houses, businesses etc attached to it?

  5. Rickmann

     /  June 30, 2018

    It just confirms Wilson as a government conduit.

    • Blazer

       /  June 30, 2018

      I thought it confirmed MSM as a right wing ..conduit.

      • PDB

         /  June 30, 2018

        By allowing a left-wing shill to spew clearly incorrect information in support of his beloved Govt/Council?

      • Alan Wilkinson

         /  June 30, 2018

        Of course you did. That’s what passes for thought in your mind even when there is no possible basis for it.

  6. Blazer

     /  June 30, 2018

    didn’t we already go over this when National increased the price of fuel by 17cents a litre in their term….?…oh thats right..we didn’t..then..it wasn’t headline…news!

    • Gezza

       /  June 30, 2018

      No we didn’t hear about it. Mostly because the msm was so pro-National. But also because Labour was such a bloody hopeless Opposition. Regressive hidden taxes all over the bloody place from National & they pissed me right off because they impact most on low income receivers. So for Labour to go & increase them on top of just adds insult to injury. I don’t mind Aucklanders some sort of additional tax or rates increase to fix their woeful infrastructural deficits, but I object to everyone else paying increased fuel levies & Labour setting things up so other slackass councils can slam their residents with rates increases plus levies that will up the price of everything.

    • PDB

       /  June 30, 2018

      17 cents over 9 years (1.88 cents/year) and almost the same amount in one hit for Auckland………..I wonder what would affect low income families in Auckland the most? Are you saying Blazer that Aucklanders can expect no more fuel tax increases for the next 8.5 years or so? Now the door has been opened by this govt for ‘spending addicted’ Councils to implement regional fuel taxes do you think they will never increase them, ever?

      Your lack of economic nous exceeds that of Simon Wilsons.

      • Blazer

         /  June 30, 2018

        as you know very well the Council/Supercity is responsible for the biggest increase,and most Aucklanders understand why it is …needed.You now bark at every passing car.

        • PDB

           /  June 30, 2018

          Now you are giving Wrongly Wrongson a run for his money…

          This govt has passed legislation to allow Councils to charge a fuel tax, without it they couldn’t and would have to live within their current means. It’s like you giving a free loaded gun to someone else with detailed plans on how and when to shoot someone and once that person was dead you would then turn around and say you were blameless.

          Blazer: “Most Aucklanders understand why it is …needed” – they might understand why it might be needed but what they don’t understand is how the fuel tax will be wasted in areas that does nothing to fix the problems many of them face day-to-day on the roads.

          • Blazer

             /  June 30, 2018

            who lives within their means in this day and age?
            National borrowed around 100 billion …for latter generations to…repay!!

            • PDB

               /  June 30, 2018

              You’re like a stuck record player playing the same old lame tune – the same guy that can’t comprehend what even Grant Robertson concedes in terms of a future global economic shock: “The low level of public debt is a really important part of it,” Robertson told Guyon Espiner. We are “a country that always has to be aware of external shocks” and that this is “…why we keep our public debt lower than a lot of other countries”.

            • Trevors_Elbow

               /  June 30, 2018

              You LOOOOVVVE this squirrel, Bol.. You know its bullshit and keep spinning it.

              Again where should services have been cut post the GFC and whilst NZ was already in a recession? health? Education? Social Welfare? WHERE? Lets hear your plan….

            • Blazer

               /  June 30, 2018

              to the usual 2….my post was a response to this….’would have to live within their current means.’

              now you know what I said makes sense…suck it up…

            • PDB

               /  June 30, 2018

              So in your world: When economic times are good – borrow more, when economic times are bad……borrow more.

              Which leads back to my original statement: “Your lack of economic nous exceeds that of Simon Wilsons.”

            • Trevors_Elbow

               /  June 30, 2018

              “to the usual 2….my post was a response to this….’would have to live within their current means.’

              now you know what I said makes sense…suck it up…”

              Oh dear more diversionary bullshit no response to the question – you’re getting worse …

          • phantom snowflake

             /  June 30, 2018

            Wow. Have never before seen the term “Wrongly Wrongson” used outside of Whaleoil. You’re definitely showing your roots…

            • PDB

               /  June 30, 2018

              Wow. Didn’t know you were a far-right winger Snowflake as obviously you know “Wrongly Wrongson” came from Slater! Obviously PG is a hard-line right-winger as well as he often talks about various Whaleoil posts and quotes from that site. And what about that term being used on here previously by Corky and the like so hardly new? Maybe other regulars on here will point out I can’t stand Slater? (or Bradbury for that matter).

              Nice leap in logic though! You’ll be giving “Wrongly Wrongson” a run for his money soon!

            • phantom snowflake

               /  June 30, 2018

              OMG! My cover is blown! My identity as a far-right satirist is visible to all. I’m out.

  7. Zedd

     /  June 30, 2018

    more short-sighted fear-mongering from Natl/their cronies.. who would prefer just to build more roads, which will actually, do very little to reduce congestion

    time to get into 21st century; improved public transport options, (esp. TRAINS) which will likely be used more by the poorest folks 🙂

    • Trevors_Elbow

       /  June 30, 2018

      More ignoring a Leftie telling porkies because…. because… Natz Sux Maaaan

      • Blazer

         /  June 30, 2018

        trev…I have answered your question on numerous occasions ….

      • Zedd

         /  June 30, 2018

        @ trev
        meaning… ?? :/

  8. Fred

     /  June 30, 2018

    You statement that you won’t be getting the Auckland fuel increases doesn’t sound true to me as this will affect the transport if so many of our goods and services that you will indirectly end up contributing to it as the cost of everything increases.

    • Kitty Catkin

       /  June 30, 2018

      This is an obvious point that really needs to be made as some people don’t seem to see this coming.

      I don’t imagine that Mainfreight will be paying $5.77 a week more on it’s vehicles’ fuel cost..

      • Fred

         /  June 30, 2018

        Yeah I work for a national logistics company and we have modelled applying just the increases to our business in Auckland as well as across the board in the country. I imagine we will go with across the board changes as the Auckland market is highly competitive and slightly.lower margins than outside of auckland

        • PDB

           /  June 30, 2018

          Can’t you just take all your goods on bikes or the bus?

        • Blazer

           /  June 30, 2018

          its neither here nor there and any businessman knows that the price of oil fluctuates on the international market .
          We have seen barrel prices from $50 to $150 in recent history.
          The opposition are trying to beat up a story…thats’ all.

          • Alan Wilkinson

             /  June 30, 2018

            If it was not part of a continuous pattern of tax and regulate it might not be here or there. But it is.

            • Blazer

               /  June 30, 2018

              good to see you agree.International prices and the xchange rate are the main factors.

  1. Government claims wrong, Wilson concedes that fuel tax is regressive — Your NZ – NZ Conservative Coalition