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Smith: Government Announces 2009/10 Levy Rates

Contributor:
Fuseworks Media
Fuseworks Media
Nick Smith
Nick Smith

16 December 2008 - The Government is to reluctantly increase ACC levies for employers and workers next year - less than those recommended by officials, ACC Minister Nick Smith says.

"This has been an extremely difficult decision for the Government to make and our priority has been to minimise the impact of levy increases on households and businesses. The increases are as modest as legally possible.

"Two weeks ago Department of Labour officials recommended substantial levy increases of 43 percent for next year for the Earners' Account and increases for the following years on all ACC accounts. The Government has decided the public is in no position to face those levels of costs increases and has rightly pulled them back.

"The previous Labour Government left the country with a massive fiscal hole of $4 billion. The scale of the blow out in costs is such that increases are inevitable to ensure ACC's ongoing viability.

"The National Government has had to take action."

The Government has adopted the following levy rates: The Earners' Account Levy (paid by all employees and self-employed to cover their non-work, non-motor vehicle injuries) will increase from $1.40 to $1.70 (including GST) per $100 of liable earnings The average composite employer and self-employed levy will increase from $1.26 to $1.31 per $100 of payroll. This levy excludes GST and is an average rate. Individual rates for industry groups may be higher or lower The new rates take effect on 1 April 2009

"A person on the average wage of $47,000 per year currently pays $658 a year or $12.61 a week to ACC for the Earners' Levy. Under the DOL recommendations for next year, an average wage earner would be paying $940 a year or $18.02 a week.

"In difficult economic times that level of increase was unacceptable. That is why the Government has opted for a lesser rate of $799 per year or $15.31 a week.

"The decision on motor vehicles levies needs to be made by March next year and there are options to extend the full funding date beyond 2014 to lessen any increases. Any changes to the Motor Vehicle Levy will take effect on 1 July 2009.

"Today's announcement comes after the Government on 8 December approved an additional $297 million appropriation to cover the shortfall for this fiscal year for the Non-Earners' Account.

"A further concern is that officials are projecting increases in the Earners' Account levy from today's $1.40 to $3.00 in 2013/14 and the Work Account levy from $0.72 today to $1.13 in 2013/14. These are unacceptable to the new Government and we will need to work hard to restrain costs.

"We will be proceeding with our stock take of all accounts in the new year, and will be working with stakeholders and officials on options to get costs under control."

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