Source: Radio New Zealand
Transport Minister Chris Bishop speaking at the Automobile Association’s annual conference on Friday. RNZ / Marika Khabazi
The government may put on hold its plans to raise fuel taxes next year, as it deals with how to respond to the fuel crisis.
National campaigned on not lifting fuel taxes at all in its first term, which Transport Minister Chris Bishop maintains was “the right thing to do” in a cost of living crisis.
Instead, the government plans to bring in a 12 cents per litre increase from January 2027, followed by a 6 cents per litre rise in 2028, and 4 cents per litre in subsequent years.
Fuel taxes are set at a flat rate per litre, meaning they do not go up or down as the price of fuel does.
The government has been resistant to cutting the fuel tax in the crisis, wary that doing so would subsidise demand.
The transport system is supposed to be user-pays, but Bishop said increasingly it was coming from general taxation.
Speaking to the Automobile Association’s annual conference on Friday morning, Bishop admitted that not raising fuel excise duty had deferred the issue of how the government funds transport infrastructure until later.
Chris Bishop says Kiwis’ transport habits are changing during the current Middle East crisis. RNZ / Marika Khabazi
But he hinted the government may defer the anticipated rise further.
“I have to be honest with you, the idea that we would raise fuel tax during a fuel crisis doesn’t seem like a starter to me. So we’re thinking hard about these funding challenges. They are real, and they do exist.”
The government’s intention is to replace all fuel excise duty with road user charges, which diesel and electric vehicles already pay.
Bishop also said people’s transport habits were changing in response to the conflict.
Comparing the two weeks pre-conflict in mid-February with seven-day rolling averages in the subsequent weeks, Bishop said there had been a reduction of approximately 20 percent in vehicle kilometres travelled by car.
“This is not necessarily surprising when petrol prices are up about 30 percent. Also not surprising is that people are responding in a predictable way, they’re using public transport more.”
Public transport boardings were up more than 10 percent in Auckland and Wellington.
Last week also saw the highest number of electric vehicles registered since the end of 2023, around the time the new government abolished the Clean Car Discount scheme.
Year-do-date EV registrations were nearly 2000 higher than this time last year.
But Bishop was adamant the government would not bring back the discount, saying people who did not have the ability to make the transition to EVs were having to pay more, to give money to people who could make the transition.
“It was a regressive wealth transfer policy, and so we will not be bringing back the Clean Car Discount.”
– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
