Government MPs accidentally cut proposed taxes for plug-in hybrids in vote for wrong amendment

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MPs from the governing parties voted in favour of a Labour amendment in a select committee report, recommending the House reduce a proposed tax rate for plug-in hybrid vehicles.

With the bill now back before the House, Labour and the Greens are urging the Government to keep the bill as it is for the sake of the climate.

They might be in luck; Transport Minister Simeon Brown told the Herald he was aware of the report and the accidental change was “something we are open to looking at as a Government”.

Currently, battery EVs and plug-in hybrids enjoy favourable treatment by paying no road user charges, and in the case of plug-in hybrids, very little fuel tax.

Brown has pledged to reverse this, and introduced legislation to force both classes of vehicles to pay road user charges (RUCs). Because plug-in hybrids already pay some tax, through fuel excise, there has been a contentious debate over just how high their road user charge rate should be set.

The Government believed it should be set at $53 per 1000km, a 30 per cent discount on what an equivalent diesel vehicle would pay.

Green MP Julie Anne Genter pointed out that this would make those vehicles very heavily taxed, and taxed more heavily than vehicles that polluted more.

Labour’s Transport Spokesman Tangi Uitkere said MPs on the committee heard a more appropriate RUC level would be a 50 per cent discount, or $38/1000km. Labour MPs had an amendment drafted to that effect.

They put the amendment to the committee, expecting it to be voted down by the Government majority. Instead, the committee voted it through unanimously, and it now sits in the amended version of the bill the committee has returned to the House.

This is despite the text of the select committee’s report noting that [t]he “majority of us consider that a 30 per cent reduction of the RUC rate effectively accounts for any additional costs in fuel excise duty” - in other words, the text of the report endorses the original bill, but the committee’s proposed changes to the original bill include the reduced RUC rate proposed by Labour.

The chair of the committee, NZ First’s Andy Foster, was informed by the clerk what the committee had voted on and sought leave to have the vote taken again. This was denied.

The change means the Government cannot accept in total the committee’s recommendations and the House will have to vote on them one by one, unless they choose to accept the new rate.

Brown said he was open to looking at the recommendation.

“I asked the Select Committee to test the advice around the proposed RUC rate for plug-in hybrid electric vehicles,” he said.

“I am aware of the Select Committee’s report and the Government will consider its recommendations,” he said.

Foster acknowledged there had been a mistake.

“We asked to fix it when we realised we got that wrong, [but] Labour denied that,” he said.

Foster said the committee had been working quickly to analyse the bill, and hear submissions. He said submitters had agreed those cars should pay to use the road but they had disagreed over how much.

Genter, a well-known advocate for reducing speed in the name of road safety, noted the committee’s error was a good metaphor for the dangers of going too fast.

“The coalition has been moving at breakneck speed, setting records for bills passed under urgency, and they have a lot of brand new MPs, who don’t fully know their way around the system yet,” she said

Utikere said the mistake showed the “shambolic” process followed by the Government as it rushed to legislate the RUC changes. Usually, a committee would have months to consider a bill like this, but in this case, the committee had just over a week.

“Basically an eight-day select committee process is far from ideal; we would like to have heard from more people,” he said.

Utikere told the Herald the MPs’ mistake was “a big win for those who want to take climate change seriously” and urged the Government not to change the bill back when it comes up for debate again.

Genter said she was pleasantly surprised to see the changed bill, and hoped the Government would keep the changes, although the Greens were also keen to see the EV rate cut too.

Thomas Coughlan is Deputy Political Editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.

For more political news and views, listen to On the Tiles, the Herald’s politics podcast.

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