13 June 2012

Small diesel vehicles lose out again

The Motor Trade Association (MTA) says owners of light diesel vehicles have again lost out. They have been denied the full benefit of the inherent fuel efficiency of their vehicles with government’s decision to retain a flat line approach to Road User Charges (RUC).

Transport Minister Gerry Brownlee yesterday announced changes to RUC, set to take effect from 1 August, would simplify the process for everyone who uses it. Part of these changes will see the RUC rate for light diesel vehicles increase to $48 per 1,000km.

As at today, diesel vehicles less than 2.0 tonnes pay $44.31 per 1,000km. Vehicles between 2.0 and 3.0 tonnes pay $46.51 per 1,000 km while vehicles between 3.0 and 4.0 tonnes pay $49.29 per 1,000 km.

Diesel vehicles typically enjoy a fuel efficiency advantage over petrol equivalents of around 30 percent.

MTA spokesman Ian Stronach says “While we weren’t really optimistic that government would change its view on RUC for light diesel vehicles, we were hopeful. They are searching for more innovative solutions around vehicle licensing as part of their current review. We thought they might perhaps apply the same reasoning to RUC. It doesn’t appear that this is the case.”

Government estimates that around 36 percent of diesel is used off-road, by users such as farmers, manufacturers and marine operators. They claim that imposing a tax on all diesel would impose an unfair burden onto these sectors. In their view, operating a refund system would be costly and cumbersome to administer and involve compliance costs without any related benefit. A refund system, they say, would also potentially be susceptible to fraudulent claims.

Stronach says, “As it currently stands, the owners of at least 240,000 light diesel vehicles are faced with the burden of paying for RUC on a regular basis. If having to pay RUC several times a year, collecting and then needing to display a unique Distance License label in the windscreen of their vehicle is not a costly and cumbersome system for the majority of diesel users, then what is?”

At the new rate announced, the RUC rate for light diesel vehicle equates to around 32 litres of diesel per 1,000km. For vehicles like the Ford Fiesta LX Diesel, which has a rated fuel consumption level of just 4.4 litres per 100 km, imposing a flat line RUC negates much of the advantage that its high tech engine provides. It is effectively being treated the same as a 2.7 litre Ford Territory TX Diesel AWD that has a rated fuel consumption level of 8.8 litres per 100 km.

“That hardly makes sense. And it’s not what most people would regard as fair either. If the aim is to encourage smarter transport solutions, why not take the time to design a sliding scale of costs for light diesel vehicles. Many diesels are providing truly outstanding levels of fuel economy, and they represent a realistic and affordable technology option for many owners. At least they would be if they weren’t being penalised by a one size fits all approach from government,” says Stronach.

ENDS

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