Latest news with #roadusercharges
RNZ News
5 days ago
- Automotive
- RNZ News
What we know so far about the new road user charges and the end of petrol tax
The government proposes to phase out petrol taxes in favour of electronic road user charges by 2027. Photo: RNZ / Marika Khabazi Explainer - The government made it official this week that the petrol tax is on the way out, to be replaced by electronic road user charges, or RUCs, for everyone. Drivers of all light vehicles - petrol, hybrid, diesel and electric - will now pay for road use based on distance travelled and vehicle weight, instead of an extra charge at the pump. Right now, Road User Charges (RUC) only apply to vehicles not powered wholly by petrol, and all vehicles weighing more than 3.5 tonnes. An awful lot of the specifics around the new system remain uncertain, as the government considers how to implement the plan. But here's what we know so far. All of Aotearoa's 3.5 million light vehicle owners will need to pay RUC fees to help pay for road upkeep and maintenance. But exactly how the fees will be set and collected are still a work in progress. In making the announcement, Transportation Minister Chris Bishop said it was "the biggest change to how we fund our roading network in 50 years". It comes as more and more drivers use hybrids, electric vehicles or other technology. Bishop said the number of fuel-efficient petrol hybrid vehicles has jumped from 12,000 in 2015 to 350,000 today. "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." "This is a change that simply has to happen. The government has recognised reality and is getting on with the transition." Replacing fuel excise taxes with electronic road user charging was part of National and ACT's coalition agreement. The government's been signalling this move for some time and last year scrapped an Auckland regional fuel tax of 11.5 cents per litre . AA principal policy adviser Terry Collins said while the association thinks the changes are good in principle, "we need to see the detail". Transportation Minister Chris Bishop. Photo: RNZ / Samuel Rillstone That's one of the big question marks right now. Under the system, all vehicles would be paying for road use based on distance and their vehicle's weight, Bishop said, but no detail on the weight limits was given. The current RUC for light vehicles - under 3500kg - are $76 per 1000km. The average Toyota Corolla weighs between 1200-1500kg. Charges can widely vary for larger vehicles under the current RUC, according to NTZA's website . There's also an administration fee of $12-$13 per transaction. No costs or parameters for the new system have been announced, but just as an example under the current RUC setup, a small electric vehicle would pay more than $760 including fees for 10,000km worth of credits. Photo: RNZ / Dan Cook Again, answer unclear. Bishop said currently, petrol drivers pay a tax of about 70 cents per litre. However, the AA says that the full cost of fuel excise, duties and taxes such as GST altogether was over $1.20 per litre as of mid-2024 . There's no real way of knowing yet if the changes would automatically drop 70 cents or more from fuel prices. Legislative work toward the changes will begin next year, with the government eyeing 2027 for the new system to take place. "At this stage, no date has been set for the full transition of the light vehicle fleet," Bishop said. "That's a deliberate choice, as we're focused on getting the system right rather than rushing its rollout." The legislative plans include: "The changes will support a more user-friendly, technology-enabled RUC system, with multiple retail options available for motorists," Bishop said in announcing the changes. "Eventually, paying for RUC should be like paying a power bill online, or a Netflix subscription. Simple and easy." Bishop told ThreeNews that users could possibly pay road RUCs through an app, and log in and pay what they owed at the end of each month. The next step for the plan is changes to the Road User Charges Act 2012, and a bill will be introduced to Parliament and referred to a Select Committee for public input. "I expect to pass legislation in 2026, followed by an updated Code of Practice for RUC providers," Bishop said. "We will also engage with the market in 2026 to assess technological solutions and delivery timelines. In parallel, NZTA and Police will upgrade their systems to support enforcement in a digital environment." An example of a current road user charges permit. Photo: RNZ Bishop called the current setup for light vehicles a "clunky" system. You keep track of your odometer readings, pay for RUC in 1000km chunks and put a sticker on your windscreen that shows how many km they are good for. Once your odometer passes the number you've paid for in RUC, you need to pay for more. "We're not going to shift millions of drivers from a simple system at the pump to queues at retailers," Bishop said. "So, instead of expanding a clunky government system, we will reform the rules to allow the market to deliver innovative, user-friendly services for drivers." The AA's Martin Glynn told Morning Report that it's not the easiest system for users. "The biggest problem with it, people need to keep an eye on their odometers and see if they've used up their RUC and need to buy more. That's probably the biggest problem with it." However, the government said it wants to shift away from the "outdated" system and replace it with greater use of electronic RUC, or eRUCs. Basically, instead of having to keep track of your odometer readings and paying as you go for km credits, it's a device that does that work automatically. There are a variety in place now for current requirements. There are several approved eRUC providers for the heavy vehicle fleet of vehicles over 3.5 tonnes. "EROAD's system automatically records the distance each vehicle travels on-road and accurately records all off-road travel with its intuitive GPS-tracking capability," the website of one of the providers, EROAD, states. Infrastructure New Zealand chief executive Nick Leggett applauded the change and said it could work well with other transport charges. "User-charging is a fair, proven way to fund infrastructure. eRUC will make it easier to apply that principle consistently across all vehicles, whether petrol, diesel, electric or hybrid, and as our transport system evolves. "We also see the use of flexible payment methods and the integration of eRUC with other transport charges such as tolling and congestion pricing as sensible moves." However, there's still a lot of questions around the costs of implementing eRUCs for everyone. Would all cars be fitted with new devices or would some kind of self-monitoring system be in place for those with older vehicles? There's also been a fair bit of talk doing the rounds on social media about the idea of electronic records on vehicle travel and worries about the government tracking people. In a statement to RNZ, Bishop said there were privacy protections in place and it would remain a concern in developing the new systems. "The Road User Charges Act 2012 has existing provisions that protect privacy by limiting what RUC electronic information the RUC collector can access. "Location data can only be accessed to verify where the driver is owed a refund for off-road use. "Officials will be engaging with the market and stakeholders (including the Office of the Privacy Commissioner) on the features of potential solutions, such as cost, privacy and ease of use." The AA's Collins said it would be important to see the detail of "who has that information and what's done with it". "Everybody in the trucking industry wants to have that technology fitted. I don't think that's the case in the light fleet." Collins noted that our phones - which almost everyone has with them in their cars - are also packed with tracking technology. Other countries have managed similar systems, he said, but "it's what the data will ultimately be used for in the future that's the biggest concern". In their announcement, the government also said that private firms will take over the collection and administration of charges from NZTA, "to foster fairer competition". Tax Justice Aotearoa said they were concerned about that change and taking the responsibility away from the government. "We are deeply concerned by this initiative as using the power of the state to require citizens to pay charges decided by the state is a core function of government," Chair of Tax Justice Aotearoa Glenn Barclay said in a statement. "It should not be for the profit of anyone and it means that the details of thousands of road users will be held and managed by private organisations with no accountability back to the public." "Putting RUC in the hands of private companies, who will need to make a profit on the transactions, is a recipe for higher fees for drivers," the Public Service Association union's national secretary Fleur Fitzsimons said. All vehicles will now have to pay RUCs. Photo: RNZ / Nicky Park It's unclear. Petrol could in theory be cheaper, but will be somewhat offset by RUCs all vehicle owners must pay. "This is a once-in-a-generation change," Bishop said. "It's the right thing to do, it's the fair thing to do, and it will future proof how we fund our roads for decades to come." Collins said the distance-based changes could benefit certain drivers, such as those who own multiple vehicles that aren't actually travelling much, or boat users. "Nothing's going to be cheaper, we know that," he said. "It's like saying do you think that your cars are going to be cheaper in three years' time?" "Realistically, we want to be building a modern safe roading network and that's not cheap. All of us as road users need to contribute to that." Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
RNZ News
5 days ago
- Automotive
- RNZ News
Road user charges: AA backs shake-up but wants low admin costs
Photo: RNZ Private companies will need to keep the costs of running the government's new road user charges scheme as low as possible, the AA says. The government is inching closer to replacing petrol tax with electronic road user charges on all light vehicles, in what Transport Minister Chris Bishop calls [ the biggest shake-up of road funding in half a century]. He says it'll be fairer and will be like paying a power bill or Netflix each month and will be in place by 2027. The changes will put an end to the existing two-tier system, where petrol users pay a fuel excise duty of about 70 cents a litre at the pump, while diesel, electric and heavy vehicles pay paper-based road user charges based on distance travelled. However, Labour says the timing of the coalition's transition to a universal road user charges system risks "clobbering" motorists with more costs. AA's policy director Martin Glynn said his organisation is also worried about how much motorists would have to pay under the new scheme. He told Morning Report he was unsure if it would be more expensive. At present the minimum road user charge kicked in once a light vehicle had travelled 1000km. That was $76 and $12-$13 for an administration fee. With private providers being brought in to run the revised scheme they would need to be making money, Glynn said. "We really want to see the administration costs be as low as possible." He agreed with the Minister that with more vehicles becoming more fuel efficient, the current petrol tax penalised those with older vehicles. "It's become more unfair over time and it's going to become more unfair if we don't change." The current system of buying RUCs was "a bit clunky", he said. Those using diesel or a heavy vehicle purchased RUCs online from the NZ Transport Agency or they could go to an agent. Motorists needed to keep an eye on their odometer to ensure they stayed up to date. The other problem was the the RUC came in the mail and needed to be displayed on the dashboard. AA supported Bishop's plan to make the system fully electronic. Annual warrant of fitness checks were the main way to ensure compliance at present. "But it's fair to say it's difficult to enforce being an annual system so there's a fair degree of evasion and avoidance and that's something that will have to be addressed in the transition." Heavy vehicles already have an ERUC, a device in the trucks that monitors kilometres and location.
RNZ News
6 days ago
- Automotive
- RNZ News
Govt closer to RUC on all vehicles
transport policy 12:17 pm today The government is inching closer to replacing petrol tax with electronic road user charges, or RUCs, on all light vehicles, in what the Transport Minister calls the biggest shake-up of road funding in half a century. Political reporter Anneke Smith spoke to Charlotte Cook.
Bloomberg
6 days ago
- Automotive
- Bloomberg
New Zealand to Replace Petrol Tax in Major Road Funding Reform
New Zealand has announced plans for a radical reform of how it pays for roading, turning its back on petrol taxes that were first introduced almost a century ago. The government will abolish the tax and replace it with road user charges for all light vehicles, Transport Minister Chris Bishop said Wednesday in Wellington. Legislation will be introduced in 2026 to allow a new system to be ready in 2027, but no firm implementation date has been set, he said.
