Fears new charges will ‘distort’ market

The government is being accused of incentivising consumers to buy polluting vehicles with the changes it is making to road user charges (RUC) from April 1.

The Better NZ Trust says the owners of some battery electric vehicles (BEVs) will have to pay more than twice as much as the fuel excise duties for an equivalent hybrid car.

It adds some internal combustion engine models will also attract lower annual levies than how much EV owners will have to fork out for RUC.

The warning comes after Simeon Brown, Minister of Transport, announced that light EVs and plug-in hybrids (PHEVs) will lose their exemption from RUC on April 1. 

Rob Birnie, a Better NZ Trust spokesman, says: “The new system will see many petrol-fuelled cars paying less to use the roads than EVs. 

“The Better NZ Trust is supportive of everyone on our roads fairly contributing to the upkeep and maintenance of our roads, however, the changes proposed by the government do not come close to accomplishing that goal.”

Once the RUC exemption expires, BEVs will be charged $76 per 1,000km and PHEVs face a reduced rate of $53. 

The trust, which is a member of the Global EV Alliance, says petrol and hybrid vehicles without a plug currently pay 89c a litre in fuel excise duty and related charges. 

It calculates that light cars using petrol will pay less than $76 per 1,000km in fuel excise duty if their efficiency is better than 8.5 litres per 100km.

“The government’s changes to RUC will result in New Zealanders paying highly varied amounts of tax towards supporting our roads, artificially promoting some fuel types over others and distorting the market,” adds Birnie. 

“Some EVs will pay more than twice as much in RUC as they would if the owner were to have bought a more polluting hybrid vehicle of the same make and model. 

“Even many traditional petrol vehicles will pay less tax than EVs under this new scheme.”

For example, the trust explains a 2023 Hyundai Kona EV would pay $7.60 in RUC for 100km of mileage under the new policy, while the petrol version of the same vehicle would pay $6.50 and the hybrid model only $3.83 in fuel excise duty. 

It says this equates to nearly $600 of additional cost annually for the EV owner compared to a hybrid driver covering the same distance each year.

“These changes will encourage New Zealanders to purchase dirtier vehicles, locking in decades of additional emissions,” fears Birnie. 

“We would like to see a road tax system that appropriately accounts for all the intricacies of the vehicles that use our roads, not one based solely on what fuels each vehicle.”
Birnie says the trust wants the government to rethink its policies and find a solution that is “fair for all road users”.

Minister’s view

The government has committed to eventually applying RUC to all vehicles, with the measure a key transport policy of the National-Act coalition agreement.

Brown says he has asked Ministry of Transport officials to begin policy work on transitioning from fuel excise duty to RUC, reports the NZ Herald.

“How much cars pay in fuel excise duty varies widely depending on the size, weight and the different fuel efficiencies of each vehicle,” the minister adds. 

“The costs that owners pay are always dependent on how they use their vehicles and the distance they travel. That is why we are committed to working towards all vehicles moving into the RUC system.”