ACC levies remain unchanged - some will drop

The government has announced a reduction to the Accident Compensation Corporation’s (ACC) work levy and that all other ACC levies will remain unchanged.

The decision will save New Zealand businesses and their customers around $100 million over the next two years compared to current rates, according to Prime Minister Jacinda Ardern.

“When the rises in ACC levies was first discussed the government took a clear position that a compelling case would need to be presented in order for us to agree to levy increases, and that Cabinet would consider the wider public interest,” Ardern explained. “We have been guided by advice from MBIE and the Treasury in reaching this decision.”

The Prime Minister noted that the Treasury advised that it supports the decision due to the “high solvency levels of the accounts, and because they consider the assumptions to be conservative for a statutory scheme.”

The key aspects of the ACC levies for 2019/20 and 2020/12 include:

• The average work levies paid by employers and self-employed people will decrease from 72 cents to 67 cents per $100 of liable earnings;
• The earners levies paid through PAYE (or invoiced directly through ACC for self-employed people) will remain at its current level of $1.21 per $100 of liable earnings;
• The average motor vehicle levies, which include the annual license levy and petrol levy, will remain at $113.94.

Meanwhile, the ACC vehicle risk rating (VRR) programme, which applied different levy rates to different makes and models of cars based on their safety ratings, will also end. It has proved challenging for ACC to administer and lacks evidence that it is contributing to a safer vehicle fleet in New Zealand, Minister for ACC Iain Lees-Galloway added.

The new work and earners’ levies will come into effect on April 01, 2019. The vehicle risk rating will no longer apply from July 01, 2019 with the motor vehicle rates coming into effect on the same date.