Luxon and Finance Minister Nicola Willis stressed the need for New Zealand to live within its means and keep a handle on debt, both keen to avoid “repeating mistakes of the past” in the years following the global Covid pandemic.
Luxon called it a “responsible” decision that avoids hiking inflation.
Tax adjustments and price caps
Governments around the world have adopted a suite of measures, from tax cuts to rationing, aimed at easing the impact of surging petrol prices resulting from the war in the Middle East.
Some countries with limited reserves have also opted for measures designed to reduce consumption.
This week, Spain rolled out a €5 billion ($9.9 billion) plan that reduces the value added tax (VAT) on petrol from 21% to 10%.
The move is expected to provide immediate relief at the pump, reducing petrol prices about 30 euro cents (60c) per litre.
A similar tax adjustment has been introduced in Portugal, where a temporary reduction has resulted in savings of up to 7.3 euro cents (14.5c) per litre.
Price caps on fuel have been extended this week in Croatia – €1.62 ($3.22) per litre for regular petrol, and €1.73 ($3.43) per litre for diesel.
Maximum price limits are also in place in South Korea, Hungary, and Thailand.
Subsidies
Volatile oil prices resulting from the Iran conflict have led the Japanese Government to intervene further up the supply chain.
Industry minister Ryosei Akazawa said last week the Government moved to “swiftly implement emergency measures to mitigate sharp fluctuations in fuel oil prices in order to protect people’s livelihoods and economic activity”.
It is subsidising refiners to keep petrol prices about ¥170 ($1.84) per litre.
United Kingdom Prime Minister Sir Keir Starmer said today the Government was “actively looking” at subsidising household energy bills before a possible winter price surge.
Ministers have also signalled they may crack down on companies using the conflict to justify price increases and would consider offering support to businesses struggling with higher energy costs.
Taiwan uses a “price-smoothing” mechanism to keep gas prices low, absorbing about 60% of price increases.
The Taiwanese government also offers targeted fuel subsidies for the fishing sector (14%) and agriculture sector (50%).
Targeted support for key industries
Earlier this month, the Brazilian government introduced a temporary suspension of federal taxes on diesel.
Greece has set aside €300 million for relief for households and farmers, while Morocco announced a direct aid programme for road transport professionals such as cargo and passenger carriers.
The Moroccan Government said it aimed to “mitigate the impact of rising fuel prices on the domestic market, in order to safeguard citizens’ purchasing power”.
Vietnam announced it would waive or reduce customs duties on various fuel imports until April 30.
Petrol stations in Germany are also only allowed to raise their fuel prices once a day at noon.
Rationing and restrictions
Some Asian countries have also taken steps to curb fuel consumption.
Thailand and Vietnam are encouraging remote work, while the Philippines has introduced a four-day working week for government employees to reduce commuting.
Bangladesh started rationing fuel for private motorists in early March.