- Road User Charges to apply to all vehicles, regardless of powertrain.
- It'll all be electronic: no more windscreen licences.
- New system 'open for business' by 2027, says Transport Minister.
The Government has agreed to institute Road User Charges (RUC) for all light vehicles, regardless of powertrain, which will mean the abolition of petrol tax.
Currently, petrol vehicles are taxed at the pump through a Fuel Excise Duty (FED) of about 70 cents per litre, while diesels and electric vehicles pay a separate RUC (displayed on those nifty extra registration-style cards on the windscreen): currently $78 per 1000km, or $38 for plug-in hybrid vehicles (which already pay some FED because they have combustion engines).
“The abolition of petrol tax, and the move towards all vehicles (whether they be petrol, diesel, electric or hybrid) paying for roads based on distance and weight, is the biggest change to how we fund our roading network in 50 years,” says Transport Minister Chris Bishop.
“For decades, petrol tax has acted as a rough proxy for road use, but the relationship between petrol consumption and road usage is fast breaking down. For example, petrol vehicles with better fuel economy contribute less FED per kilometre towards road maintenance, operations, and improvements.
“We are also seeing a fast uptake of fuel-efficient petrol hybrid vehicles. In 2015, there were 12,000 on our roads, while today there are over 350,000.
“As our vehicle fleet changes, so too must the way we fund our roads. It isn’t fair to have Kiwis who drive less and who can’t afford a fuel-efficient car paying more than people who can afford one and drive more often.”
The other key change is that the new RUCs will be electronic. Vehicles will not be required to display RUC licences.
Bishop says the transition will happen in stages, to allow "private sector innovation". He expects to pass legislation next year, assess technology and give NZTA/Police time to upgrade systems.
There is no set timeline for transition of the entire light-vehicle fleet, but Bishop says the new system will be "open for business" by 2027.
“The changes will support a more user-friendly, technology-enabled RUC system, with multiple retail options available for motorists. Eventually, paying for RUC should be like paying a power bill online, or a Netflix subscription. Simple and easy."
The Motor Industry Associaiton (MIA), which represents NZ's new-vehicle importers and distributors, has come out in support of the changes. Chief executive Aimee Wiley says she is particularly happy about the announcement by Bishop today the new system when introduced will be digitally-enabled.
“Converting the whole fleet to road user charges will be a major undertaking, and we will gain nothing if we do not make use of the latest technology to manage the system digitally and in real time. It’ll make compliance much easier and administration less expensive.”