National’s surprise rego tax a blow in the cost of living crisis
Tuesday, 5 March 2024
Tova O’Brien is Stuff’s Chief Political Correspondent and host of the weekly podcast, Tova.
ANALYSIS: There was one thing voters were most concerned about during the election campaign - and one thing they remain most concerned about today.
Alongside a desire for change after two terms of Labour, a global pandemic - lockdowns and all, and fears about a spike in crime, National was elected because people believed they would make things better, less expensive, and make the economy thrive.
It campaigned on cost of living measures like nixing the Auckland regional fuel tax and not raising fuel excise taxes or road user charges this term.
What it didn’t campaign on was whacking an extra 50 bucks more on the cost of getting a rego for your car - or as the Transport Minister Simeon Brown reassured us, it’s just “a one off fee that people pay when they register their vehicle.”
It’s not a one-off fee though - one-off is, well, once - most people renew their registrations annually and, by January 2026, will be paying an extra $50 for the requirement.
Right now it costs $106 for petrol car drivers, if you put diesel in your tank it’s $175. An extra $50 is a mighty sharp increase no matter how you dice it.
And it’s netting the government a massive $660 million over three years.
It’s effectively a $660 million surprise tax that the government didn’t campaign on.
A government that campaigned on a fully funded transport plan.
Its “Transport for the Future” plan, announced in July last year, says “National’s $24 billion plan will be funded by a combination of reallocated funds from within the National Land Transport Programme, new government investment and private funding.”
It didn’t mention the fact that the National Land Transport Programme would require a $660 million top up courtesy of motorists.
Asked by Stuff why this wasn’t foreshadowed on the campaign like all the vote-winning cuts and benefits, Brown replied, “we’re foreshadowing it here”.
Is hiking rego fees a good way to fund transport upgrades? Let us know in the comments below.
There’s a strong argument that the price of regos should have gone up long ago.
The government says the annual licensing fee hasn’t been increased since 1994 meaning inflation has reduced the real value of the revenue it gets from it by half.
There’s also a very strong argument that we need the cash for to fix the potholes and build the roads that National had promised on the election campaign - unlike the rego hike.
But that doesn’t change the fact that this is problematic for National in a couple of quite critical ways.
People need cost of living relief.
Sure fuel excise tax increases have been paused for the next few years but for motorists it still feels like they’ve gone up big time recently.
Because they have. Labour had knocked 25c off to help with the cost of living in 2022, a tax break that lasted 15 months until July last year.
And National is also planning to reinstate excise tax hikes from January 2027. Under National’s plan, by the end of next term of government fuel taxes will have increased by 22c a litre. Road-user charges will go up too.
Add to that the new stealth rego cost and it’s starting to feel like all that promised hope of cost of living relief on the campaign has evaporated.
The second big issue for National is that it makes a dent in its self-proclaimed strong and stable fiscal management.
Brown told Stuff the registration increase was decided as part of the Cabinet process, meaning they didn’t see it coming.
That suggests it wasn’t hidden from voters on the campaign but their transport plan had a fiscal hole to the tune of at least $660 million.
Voters rate National for economic credibility - a big part of why they were elected in a cost of living crisis.
National’s holding steady in the polls but, as Labour knows, there’s one sure fire way to lose votes and that’s to make people feel worse off.