Tax or levy? The most self-destructive conversation National could choose

The Taxpayers’ Union says Labour can scarcely believe its luck with the Government’s insistence that its proposed levy on electricity bills isn’t a tax because it’s a levy.

Taxpayers’ Union Executive Director Jordan Williams said:

“We’ve been fielding calls and interview requests all day from people wanting to know whether we consider a levy a tax. The definition of a levy is literally ‘the act of imposing a tax, charge, or fine’. This isn’t complicated.”

“The last Prime Minister to try this line was Jacinda Ardern, who desperately wanted her clean car emissions levy not to be called what National quite rightly branded it at the time: the ute tax. Watching National now recycle Labour’s talking points is both ironic and alarming.”

Williams said while the case for improving energy security and addressing dry-year risk is legitimate, the decision to fund an LNG terminal through a compulsory charge on electricity bills was a political and policy blunder.

“This Government campaigned relentlessly on ‘no new taxes’, and warns voters that Labour and its Green and Te Pāti Māori partners would hike costs. Then it turns around and announces a new charge on one of the most sensitive household bills in the country. You don’t need a focus group to know how that lands.”

“There are clear alternatives. The Government could recycle a small portion of the $14 billion of energy assets it already owns and ring-fence the proceeds to fix the energy mess Labour left behind. Labour would struggle to criticise asset recycling when the money is used to stabilise supply and lower prices. Instead, National has chosen to tax power bills and argue about definitions.”

Williams warned that if the Government doesn’t change course, it risks undermining its core election message just months out from polling day.

“This is an unforced error. The LNG facility is defensible. Funding it through a levy on electricity is not. If National wants to keep its credibility on tax and not hand Labour a stick to whack back with, Mr Luxon should ditch the levy and insist his Ministers find another way to pay.”