Taxes going up and down, but fuel prices should be falling

Taxes going up and down, but fuel prices should be falling

Petrol tax collected to fund New Zealand’s land transport system is increasing 3 cents per litre on 1 July, the third of three scheduled annual tax increases. However, at the same time ACC is reducing the tax it collects from petrol by 3 cents per litre.

“The tax changes cancel each other out meaning they shouldn’t change prices at the pump. However, recent small reductions in commodity prices means the AA thinks petrol prices should fall slightly,” AA PetrolWatch spokesperson Mark Stockdale says.

The tax changes mean the total amount of petrol tax collected specifically for the National Land Transport Fund will rise to 59.524 cents per litre, while ACC levies collected from petrol tax will fall to 6.9 cents per litre.

“Allowing for other miscellaneous taxes and GST, the total amount of tax paid on the current retail price of $2.12 per litre for 91 octane petrol equals nearly 96 cents per litre,” Mr Stockdale added.

By comparison, tax on diesel, which mostly comprises GST, totals 17.47 cents per litre.

Road User Charges also increasing

Road User Charges (RUC) paid by diesel vehicles will also be rising on 1 July, up $4 per 1000km – an increase nearly double what it should be according to the AA.

“The reason diesel prices are much lower than petrol is because diesel fuel doesn’t incur the extra 66.7 cents per litre excise levied on petrol. But diesel vehicles pay Road User Charges instead and the $4 increase per 1000km is too much. To match the 3 cents increase in petrol tax to the National Land Transport Fund which other motorists are paying, Road User Charges should have only increased $2.50 per 1000km, or $30 over 12,000km,” says Mr Stockdale.

Over the last 3 years, the amount of petrol tax collected for the National Land Transport Fund has risen 9 cents per litre, while RUC has risen $14 per 1000km.

“For a typical 2.0 litre car travelling 12,000km a year, the extra petrol tax paid into the transport fund equals $81 a year whereas owners of diesel cars travelling the same mileage are paying an extra $168 a year. That’s double the increase in petrol tax, and the AA thinks the increases in Road User Charges for light vehicles have been too much,” Mr Stockdale says.

ENDS

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