Who else can we talking with?
New Zealand Council of Trade Unions
Level 7, West Block, Education House, 178 Willis St, Wellington.
PO Box 6645, Marion Square, Wellington 6141.
Attention: Ms H. Kelly.
Dear Ms Kelly,
As you may be aware a significant protest against the raising of ACC levies by motorcyclists is in progress.
However, since beginning our campaign against ACC and Nick Smith we have learned a great deal and we believe transmitting this data to you will be useful.
Primary Moot.
The current methods used to levy ACC are iniquitous and demonstrably unfair. Further, they sap precious capital from the consumer market while unfairly taking money from the productive sector and employees.
Please consider the structure of the levies.
1. Employee levies are based upon assumed risk of an employee but only while that employee is at work
2. Thus the risk analysis does not consider the employee risk when he is elsewhere.
3. There is no targeted levy on any activity outside the work-place other than the specific levy set against only registered road-users.
4. Non-earners of all sorts, including super annuitants, beneficiaries of all types, and unemployed children, pay no direct ‘employee type’ levy, yet constitute over 50% of the
population.
5. Tourists pay no levies.
6. Risk-based levies are, of themselves, singularly focused (work-place and registered road-users). Yet claims from these two groups comprise less than 30% of all ACC
claims. In other words, 30% of ACC payers are subsidising the other 70%.
Now allow me to bring your attention to current and proposed increases in ACC road-user levies.
To begin, we know that the average individual income (gross) in New Zealand is, according to the NZ Income Survey, 2009 June Quarter, $27976 gross.
So let’s deal with the proposed increases in the ACC levy, set at an average of 16 cents per $100 of gross income. Thus the average income-earner will lose a further $447 per annum.
You’ll appreciate that that $447 is effectively withdrawn from the engine-room of our economy; ergo the spenders. And on employees earning such low wages, the impact will be dramatic.
Wage-earners cannot avoid the employee levy, but they can avoid the road-user levy by simply not paying registration.
According to Ministry of Justice figures, in the 2009 June quarter, 7191, no-rego notices were issued. Extrapolate that to a year and we get 28,764, each attracting a fine (largely unpayable …and unpaid…by those who attract such penalties…low income-earners) of $400.
So what happens to such defaulters? They get shunted through the court system and get tagged with say, 50 hours PD. That’s roughly 12 weekend days during which they are not with their families. Meanwhile they have cost their employers an incalculable sum for the time they have to take off work to attend court.
BTW: If you think this is a fiction, go spend a day in any Traffic court in the land.
But worse. They have become criminals with a record. They are low income-earners in any event, so their “Who gives a shit?” attitude is further supported. That will lead to an increase in crime by those who have so little left to lose.
Also, the health sector suffers an increase in cost when those who simply can’t afford primary care; now to be added to by the extra Employee ACC levies, turn up at a hospital as either themselves or their children in last-gasp circumstances.
Increasing ACC will increase this factor beyond comprehension.
All businesses who run vehicles are faced with the dealing with the increase in road-user levies (both from registration and fuel levy). Who will pay that extra cost? The consumer because business will simply lump the cost onto the end-product price.
Once again, the low income earner is penalised.
In this way, social degradation expands, slowly but inexorably.
There is one absolute upon which you can rely, and that is, “A man who has nothing left to lose has no reason to comply with any law.”
And so, by maintaining current ACC levies, and arbitrarily increasing them, the government will be adding fuel to the growing lawlessness which already surrounds us.
And may I remind you the burden of ACC costs is borne by about 30% of the population.
The Solution.
The solution to ACC equity, while dramatically improving our national cash-flow, helping to protect your political tenure is elegantly simple.
Remove all current ACC levies raise GST by 2.5%.
Fifteen percent added equals 7.666% off, so GST would still be easily calculable.
The 2.5% increase to fund all ACC while leaving an annual excess of around $20 billion to pay for other health initiatives; maybe even repay some debt!
Of course you will appreciate the voter, if faced with a 2.5% hike in GST will scream long and loud unless there is an equitable reward.
Here is that reward.
1. Removing all ACC direct levies from motor vehicles saves the average household $245 p.a.. Assume a further $100 saved in the fuel levy.
2. Removing ACC (motor vehicle levies) will dramatically reduce transport operator, operating costs thus enabling goods to reduce in price. Let’s reasonably assume a
further $150 a year saving/extra spending power.
3. Remove Employee levies. Using the national average income of $28764 (gross) and using the average employee levy of 1.31% that would put a further $377 back into
employee pockets…to spend in the wider economy.
3a. In fact, the benefit to low income earners would be averagely higher than the average quoted because many to most low income earners work in higher risk industries
thus their levies are far higher than the average quoted. But we’re dealing with a concept here, not specifics.
4. Consider the value impact on a both-employed family running two vehicles.
The cost.
Using the average income of $28764 and dividing into GSTable and non-GSTable components. The greatest Non-GSTable component for the average low income earner is either rent or mortgage.
To that average person rent/mortgage sucks averagely $18,000 from their income. Thus they have $10,764 to spend of GSTable items. At 15% they would contribute $1614. At 12.5% GST they already contribute $1345 p.a. The 2.5% increase would represent just $269, against an $872 saving.
The Equity.
As you will appreciate, when ACC is funded from GST then all potential ACC claimants, including tourists, contribute something instead of the current regime where only 30% fund the rest.
Future Aims.
We trust the foregoing will give you cause to consider entering into talks with our lobby group with a view to combining resources with the view to force government to reformat ACC levies in the manner suggested.
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Originally Posted by skidmark
"I saw, I came, I conquered".
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