Fuel prices, who's fleecing who?

Fuel prices, who's fleecing who?

It's all well and good to say we're being fleeced at the pumps. When the government is taking 97c of every $2.20 litre of fuel, you have to ask, who's fleecing who?

The fuel companies aren't wearing any of the taxes, and nor should they. However, when the raw cost is 84c, and the margin from the importer to the consumer is 34c, there's not a lot in it to run the distribution and delivery network for the fuel companies. Frankly, they do it on very high volumes and not margin. (as reported and not checked by the NZ Herald, not sure where the other 5c went?)

However, when you break it down from a business perspective, the retailer is operating on a 15% margin from the oil tanker to the pump.

If you talk to an accountant about a business operating on that basis, unless the numbers are huge, they'll consider you somewhat crazy with the resulting risk you have. Not to mention the lack of profit if you don't turn over volume.

On the other hand, 44% of the price is taxes. Which is like saying take a pound of butter at $6.50 and selling it for $9.36 with additional taxes. The majority of people would complain and ask WTF?

This is what we are doing with our petrol.

And I won't be popular with what follows, however, we need to think this through in a way that works for us, the people.

I get that the government needs money to run the place. What we also need to realise is the lack of capital gains taxes, which impact the wealthy, not so much the middle class, are the reason we have high taxes elsewhere. And these taxes are least avoidable by the poor and middle class.

You could argue fuel taxes are another tax on the poor in favour of the wealthy. The wealthy can afford new and efficient vehicles, including electric which avoids these taxes completely, while the poorest have the least efficient and typically the biggest vehicles, think commodores and falcons.

Not to beat up on electric, as this is where we need to go. However, at some point, electric will have a RUC system like diesels have, as taxing electricity isn't a realistic option.

When electric vehicles cost 10% of the equivalent sized petrol vehicle to run, it makes a lot of sense to move the fleet to EV.

We should be providing a subsidy to our beneficiaries and minimum wage earners to move them to EV. This has the most significant impact on reducing their travel expenses.

Given this is the often the next most significant cost to housing they face, as they need to get to work to earn to eat. So food comes third in many households, and we should be concerned about that.

While the subject of capital gains tax is often greeted with an emotional reaction, the reality is our property market, and the lack of CGT is the reason we have a massive gap between rich and poor.

It is also why the property market has been able to race away as it was also fueled by a significant contribution from cash KiwiSaver funds held by banks shoring up their capital.

We need to have a reasonable bipartisan discussion about our tax system; we have to have it, it pays the bills for the required things in society. At the same time, it needs to treat all people fairly, and it should not leave anyone behind.

And for those with substantial assets that don't like the idea, especially when there's 10's of investment properties involved. There's an argument that their fair share of tax hasn't been paid either.

As a society, we should not be satisfied with the level of need in our communities. Many of the super-wealthy have, and do say; there needs to be more done to tax them, as they see the imbalance just as much as the poor do.

The harsh reality is while our politicians are well paid as they are, they don't necessarily appreciate the impact some of their plans have on the most vulnerable.

And politicians have shown they have a propensity not to impact their interests, even though that impact may benefit the rest of the country. They are human, after all.

Though as an aside, putting a bunch of ADHD people in parliament is a great idea to bring balance to the fairness approach. Though there is the propensity to get off track and find we have a thousand pet projects underway and going nowhere.

I throw this in; as an interesting underlying trait of ADHD is an overwhelming approach with most who have it, to ensure that things are fair. We know the world isn't fair, but these people are often the thought leaders that bring change. The sort of change that has given us the significant developments that enable our society today.

Jon-Paul Hale

Written by : Jon-Paul Hale

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