Diesel vehicles find themselves at the bottom of RUC

Motor Trade Association (MTA) says the current review of the Road User Charge (RUC) system identifies positive changes, but fails to address the disincentives smaller diesel powered cars face – the very cars that should be encouraged in these times of high fuel costs.

An excise charge similar to that applied on petrol, which is built into the cost of fuel at the pump would be far more efficient and easier to adjust compared to RUC, which currently sees all diesel powered cars effectively charged on a flat line basis, irrespective of their engine size.

MTA spokesperson, Ana Zandi says at a time when New Zealanders are feeling the pinch of steadily rising petrol prices, government should be encouraging the use of small, fuel efficient and low CO2 emitting diesel cars, but instead there is still a disincentive in place.

The RUC charge applied to a small diesel car such as a Hyundai Getz, is only 4.7 percent below that charged for a much larger diesel powered SUV, such as a Hyundai Santa Fe, yet the Santa Fe uses 67 percent more fuel.

Diesel is becoming more popular with an estimated 650,000 diesel vehicles on New Zealand roads, however the current system penalises the use of light, affordable, fuel efficient diesel cars. Introducing a diesel tax similar to that on petrol, would be the easiest and most sensible option and would encourage more New Zealanders to consider diesel cars.

“We believe RUC could deter many New Zealanders from considering a diesel car which have been proven to use fuel around 30 percent more efficiently than their petrol equivalents and in some cases up to 40 percent.”

Diesel engines are inherently more fuel efficient than their petrol counterparts. Comparing a popular model like the Volkswagen Golf 1.6 Litre (77kW/250Nm) diesel engine with the Volkswagen Golf 1.2 Litre (77kW/175Nm) petrol engine variant, the petrol engine uses around 38 percent more fuel than the diesel.

Zandi adds, the current RUC system costs $120 million per year to administer and enforce and yet it is also open to fraud and avoidance. A change to excise tax would help deal with this issue.

“Not only is the current system bureaucratic and creates additional work for the owner, using a distance based calculation is an expensive mechanism compared to a simple excise tax applied at the pump. This is particularly so for light passenger cars, which can serve to discourage potential buyers.”

“Excise tax is a better free market model where the government is not influencing technology through an artificial tax process and thereby indirectly influencing consumer choice.”

In some European markets, over fifty percent of cars on the road run on diesel. Increasing the number of diesel cars to these kinds of figures, could lead to New Zealand’s overall fuel consumption being lowered and with it, costs to the national economy.

“New Zealand needs to take a leaf out of their book if they want to truly realise the fuel efficiency gains that are on offer,” she adds.

ENDS

© Scoop Media