Friday, February 23, 2024

Ute tax gets the axe

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Removing the Ute Tax was a key election promise from National, and the new legislation was passed in late December.
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New Minister of Transport Simeon Brown has proven himself a man of his word, following through on a campaign promise to repeal the controversial ‘Ute Tax’ in the Government’s first 100 days. 

Legislation was passed in the final weeks of last year repealing the Ute Tax and Clean Car Discount for all vehicles registered after 31 December 2023.

Repealing this legislation was one of Federated Farmers’ 12 policy priorities for restoring farmer confidence – a wishlist that is rapidly being ticked off by the new Government. 

“Ultimately, it was the right thing to do,” Brown says.

“Removing the Ute Tax was a key election promise from National, so it was important for me to follow through on that and deliver what we said we would. 

“I know a lot of farmers were feeling singled out and targeted by some of the last Government’s policies, and the Ute Tax was one of them.” 

Brown says the tax unfairly punished hardworking farmers and tradies, who had very little choice about the type of vehicle they need for work. 

“Farmers who need utes for their job or to run their business couldn’t avoid charges under the scheme as there were few viable alternatives that could meet their needs. 

“We wanted to send a clear message that National back our farmers and we back our productive sector. This Government wants to grow the economy and get our country back on track.”

Brown acknowledges the important advocacy of groups like Federated Farmers in repealing the Ute Tax and highlighting why it was such a poor policy. 

He describes the previous Labour Government’s policy as “inequitable” and “fiscally irresponsible”.

“The scheme was supposed to be fiscally neutral, with the Ute Tax charges covering the rebates and administration costs. 

“But more has been paid out in rebates than has been received in charges, and this was only set to get worse, with more taxpayer money needed to keep the scheme afloat.

“More than $579 million has been paid out in rebates and $13.5 million spent in administration costs, while only $290 million has been collected in charges. This has left taxpayers facing a $302.5 million deficit.”

Federated Farmers transport and roading spokesperson Mark Hooper was quick to acknowledge the repeal of the tax and thanked the Minister for following through on his promise. 

“Scrapping the Ute Tax was one of our 12 policy priorities in the lead-up to last year’s election so it’s great to see it crossed off the list – but there’s still a lot more work that needs to be done to restore farmer confidence. 

“There aren’t a lot of farmers out there who will be able to afford a new ute this season with huge cost increases and lower commodity prices, but it’s the principle of it that matters.” 

Hooper says utes are an important part of farmers’ day-to-day work.

“Farmers have a genuine need for reliable four-wheel drive vehicles to tow often-heavy equipment and get around their farms safely. 

“Taxing farmers in this way only added additional cost to productive businesses for no material advantage.” 

Every time a farmer fills their ute up with diesel, they’re already paying for their carbon emissions through the Emissions Trading Scheme, Hooper says. 

“By bringing in a Ute Tax on top of this, the Government were essentially asking farmers to pay for their carbon emissions twice.

“The fact this money was being drained from hard-working Kiwis’ wallets to subsidise wealthy Tesla drivers in cities added extra salt to the wound. It was essentially a wealth transfer from rural communities to Remuera.”

With the Ute Tax now dead and gone, Federated Farmers will be turning their attention to the state of our pothole-riddled rural roads and other infrastructure issues. 

“We’ve had years of underinvestment in rural roads and some of them took a real hammering in last year’s cyclone,” Hooper says.

“For farmers and growers, those highways, local roads and bridges are critical to getting product to processors and markets in a timely manner.”

Federated Farmers will be looking to the new Government to inject funding into the roading network this year.

When asked what the Government’s plans were, Minister Brown’s message was simple: “Help is on the way.” 

Federated Farmers, New Zealand’s leading independent rural advocacy organisation, has established a news and insights partnership with AgriHQ, the country’s leading rural publisher, to give the farmers of New Zealand a more informed, united and stronger voice. Feds news and commentary appears each week in its own section of the Farmers Weekly print edition and online.

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