Petrol tax instead of OCR?

Giving the Reserve Bank the power to vary petrol prices could take the heat out of the economy without raising interest rates, says former Reserve Bank Governor Don Brash. more here

Don Brash has never been my favourite person and as the leader of the National Party he flip flopped more often than a metranome, not the sort of person I wanted in charge of the country. As an economist though he knows his stuff.

It's an interesting idea. I can see that raising the price of fuel will affect the enconomy in a similar way to raising the Official Cash Rate thus interest rates without the troublesome side effect of causing a influx of foreign money (we have the highest interest rates in the developed world) and the subsequent rising of the New Zealand dollar which hurts exporters and floods the shops with cheap imports etc.

Not to sure I like the idea of the power of setting a tax being outside of the government but at least the Reserve Bank is completely government owned.

The Herald promises more tomorrow.