Fuel tax relief extended

The government has announced it is extending the cut to fuel excise duty until the end of January next year in response to the “ongoing cost-of-living pressure”.

Slashing petrol prices by 25c a litre and road-user charges (RUC) by 36 per cent across all rates was introduced in March amid what Prime Minister Jacinda Ardern called a “global energy crisis”.

The measures, along with half-price public transport fares, were set to remain in place for three months but were extended for a further two months in the budget announcement in May.

Grant Roberston, Minister of Finance, announced on July 17 the cuts will now continue for an extra five months into 2023.

“We are doing this because we want Kiwis to have some certainty for the rest of the year in the face of volatile fuel prices and ongoing cost of living pressure,” he said.

The government says Treasury modelling suggests the excise cut reduced inflation by 0.5 per cent in the June 2022 quarter.

Extending the reductions is predicted to cost $589 million and means the government will have to pay into the National Land Transport fund to replace the lost taxes. 

Robertson, pictured, said the excise tax cuts cannot go on forever and the government was working on an “exit strategy”.

Politicians and members of the automotive industry had warned of chaos at the pumps when the tax break was due to end in mid-August.

Terry Collins, AA’s principal adviser for motoring policy, says motorists will rush to refuel cars if the policy is simply dropped and suggests the government will need to phase it out over a period of time.