RUC to impact fuel prices
The cost of fuel is anticipated to come down as the government works on a plan to shift New Zealand’s 3.5 million light vehicles to road-user charges (RUC) to fund the roading network instead of tax on petrol.
A briefing in April to Chris Bishop, Minister of Transport, shows officials expect petrol prices to go down as that transition takes place.
The document was presented by the Ministry of Transport, which has since been merged into the Ministry for Cities, Environment, Regions and Transport (MCERT), and was obtained by Newstalk ZB under the Official Information Act.
It stated to fully address the disparity between the fuel-excise duty and RUC, the fuel tax “would need to increase by 26 per cent to 91c per litre”, which is not taking place.
Petrol cars pay fuel tax of 70c per litre, while other light vehicles pay RUC of $38 or $76 per 1,000km, reports the NZ Herald.
Bishop was told the average car now consumes 8.1l/100km. And the crossover point where RUC and petrol taxes are the same were for a petrol model that uses 9.4l for 100km. That means “on average, drivers of petrol light vehicles pay less than RUC users”. The agency said: “Moving everyone to RUC would address the disparity between FED and RUC.”
Officials told Bishop that because various cars have different fuel efficiency and drive on different terrain, some petrol cars pay more per kilometre in tax than others, but RUC would be fairer and ensure all road users contribute based on usage.
The tax would therefore be phased out, reducing petrol prices, as road users switch to paying for the roading network through RUC. The aide-memoire prepared for Bishop also stated the minister was working through how future projects would be funded if the planned fuel tax and RUC increases do not go through.
MCERT says a review of pricing would be undertaken before changes go ahead. A bill shifting RUC to a digital system recently had its second reading in parliament and the new system is expected to be rolled out in 2027.
Last month, Bishop told parliament it was “unlikely” fuel taxes would rise in January but said the petrol tax had fallen by 20 per cent in real terms since 2020 and described the National Land Transport Fund as “massively oversubscribed”.
