Adding 9 cents a litre to the price of petrol by 2015 is the only way National can reach surplus in the next three years, Labour says.



The Government announced today it plans to hike the price of driving, adding 9 cents a litre to the price of petrol by 2015. In each of the next three Julys, the Government will impose a 3 cent a litre rise to the excise tax component of petrol.



The announcement came just hours before the Government opened the books for its half-yearly economic update.

The increase in excise tax on petrol would lift Government income by up to $300 million a year and Finance Minister Bill English said while it would have an impact on the Government’s accounts, he denied it was done to ensure the forecasts showed a surplus.



Labour leader David Shearer believes otherwise.



“National’s promise on the surplus is too big to break. It has to get there. But it’s forecast to get there with a razor-thin margin of just $66m by cutting jobs, selling assets and raising prices at the petrol pumps,” he said.



“New Zealanders deserve better than a Government that is out of ideas and is just managing our decline.”



The decision on petrol tax came at a time when Kiwis were already struggling, Shearer said.



“This isn’t the Christmas present that Kiwis expected. They’re finding it hard enough to pay the bills now, let alone having to pay more for petrol to paper over the cracks in National’s books.”



Each 1 cent added to the pump price of petrol adds around $15 to the annual running cost for the average motorist.



When announcing the tax increase, Transport Minister Gerry Brownlee said the Government was keen to keep overall costs down for households and businesses.



"The cost of living, as measured by consumer inflation, is at a 13-year low and interest rates are at 50-year lows,'' he said.



"This announcement allows businesses and motorists to plan for the increases." he said.



Brownlee said the excise tax rise, which will be matched by higher road user charges on diesel, was required to deliver the roads of national significance (RONS), and maintain the value of the Land Transport Fund.



"These latest increases will also achieve that, and allow for continuing investment in the Government's state highway building programme and other transport projects.’’



He said the extra money could be put towards four projects in the 2013-14 financial year, namely:



- The Rangiriri and the Tamahere-Cambridge sections of the Waikato Expressway



- The Mackays to Peka Peka section of the Wellington Northern Corridor (subject to consents)



- The four-laning of the Groynes to Sawyers Arms (Johns Road) section of the Western Corridor in Christchurch (subject to consents)