Summarised by Centrist
Petrol prices are expected to fall when fuel excise duty is phased out, but officials’ figures suggest many motorists could pay more overall once a separate road-user charge replaces the tax at the pump.
The government plans to move New Zealand’s 3.5 million light vehicles to electronic road-user charges (RUC), replacing the 70-cent-a-litre petrol tax.
A Ministry of Transport briefing said the average car uses 8.1 litres per 100km. Petrol tax and RUC cost the same for a less-efficient vehicle using 9.4 litres per 100km.
That means the average petrol vehicle currently contributes less through fuel tax than it would under the standard RUC rate.
“On average, drivers of petrol light vehicles pay less than RUC users,” officials said. “Moving everyone to RUC would address the disparity between [fuel excise duty] and RUC.”
Fuel-efficient petrol cars benefit most from the present system because they travel farther on each taxed litre. Under RUC, vehicles would instead be charged according to distance travelled. Average and efficient petrol vehicles could therefore pay more, while some less-efficient vehicles may pay less.
Officials calculated that closing the gap through petrol tax instead would require a 26 per cent increase, taking the levy to 91 cents a litre.
Final RUC pricing has not been set and will be reviewed before the digital system’s expected 2027 rollout.
Cheaper petrol will therefore not necessarily mean cheaper driving. Road-funding costs will move from the pump into a separate, more visible bill. Bishop says fuel tax has fallen 20 per cent in real terms since 2020, while proposed spending from the National Land Transport Fund already exceeds the money available.
