Increase in fuel tax proposal

[harm_less]

The glaring omission in regard to the government's latest strategy in raising FET to fund roading is the lack of any mention of RUCs.

This interview on Radio NZ https://www.rnz.co.nz/audio/player?audio_id=2018903010 mentions the apparent work currently under way at government level of a rehash of the RUC system in readiness for next April's inclusion of EVs into that tax net. So, with a hopefully fully functional RUC system just over the horizon what is the government up to rearranging details of taxation rates on fossil fuels when their unlying intent is to increase the proportion of EVs in our national fleet, thus effectively self-sabotaging this new tax increase?

Wouldn't it be more logical to tailor the new RUC system to capture sufficient funds to cope with the roading shopping list they have in front of them? A tax increase slapped into their electioneering campaign seems to not be a wise move. Is this actually a red herring which gives them an opportunity of withdrawing it as a 'tax cut' with the introduction of a fit for purpose RUC system, or is it the result of the left hand not understanding what the right is doing?

Fuel taxes are best suited to incentivise or disincentivise fossil fuel use whereas RUCs are literally meant to fund roading, or am I missing something here?

[nzoomed]

It was also bought up that with the rise of fuel prices, they actually will be collecting more in GST now as a result.
RUCs should in theory be cheaper for an EV compared to a diesel ute shouldnt they? But I was told its actually the same, so not too sure how its calculated.
I reckon the whole thing should be RUC across all vehicles and that way everyone pays a fair share for the actual road use, could potentially work out that the government gets more?
Im not sure if anyone has done the maths.

[harm_less]

The RNZ interview I linked to above indicates that there is a significant effort going on at present in the depths of parliament to redesign the entire RUC system. The only given is that EVs are scheduled to be drawn into the RUC net in April next year but recent comments are suggesting that even this date isn't set in stone yet according to a Newsroom article on the FET rise, and the level of RUCs that EVs will be charged is unknown though the present diesel rate of ~7.6c/km has been loosely suggested.

Most EV owners are well aware that they will be paying RUCs at some stage but the cost of running an EV is very low and an extra few cents per km is no big deal. In my own case our EVs cost about 2c/km charged from our PV (based on lost export opportunity to the grid), 4c/km if charged off peak and about 6c/km if peak rates apply (which is virtually never for us). Public charging on the Chargenet DC fast chargers is more expensive at ~16c/km so for those with no home charging, or those with frequent long journeys, if the existing diesel RUC rate was applied to EVs it would bring the total running (charging + RUCs) up to the equivalent of fueling an equivalent petrol car.

The complication in adding RUCs to EVs is how the question of Plug in Hybrid EVs (PHEVs) and hybrids generally are treated. The PHEVs in particular are able to operate on battery power only for short trips so have the ability to operate as an EV so RUCs will have to apply to them too (with their petrol FET refunded?). A problem is also identified in the Newsroom article in that increasingly fuel efficient vehicles in general are impacting the income stream from RUCs to less than their intended taxation level.

The existing RUC system is becoming increasingly not fit for purpose and it appears that the government is working on a major dejig of it in conunction with its EV inclusion. The logical way to balance the whole RUC system would be for all road vehicles to be charged on a distance system as diesel vehicles currently are. This would present logistical challenges in monitoring and paying for so many vehicles would probably overwhelm the existing set up. FET on petrol would need to be removed to compensate for the RUC content it currently includes. It would however make for a far fairer collection system as petrol used by boats, power tools and off road vehicles currently pay RUCs which goes against the intent of RUCs.

RUCs are as they suggest meant to pay for road construction and maintenance so a distance based charging system adjusted for weight is the best way of addressing this. Heavy Goods Vehicles in particular pay much higher RUCs based on their impact on roading and this may well need revision considering the worsening state of the state highways that they use. A purely distance based system also gets around the PHEV and hybrid conundrum.

The other current issue with RUCs on light diesel vehicles is the amount of evasion occurring by way of odometer tampering and downright ignorance of payment. A remotely monitored system similar to the existing ERoad one for commercial vehicles would work but would meet resistance (big brother?) and have a significant implementation cost.

So far as disincentivising fossil fuel use this would most easily be done by way of a variable carbon tax on petrol, diesel, etc. RUCs are a contribution towards roading costs so differentiating them to favour various fuel types runs against their primary intent. The government's recent move to raise FET in order to address roading expenditure shortfall seems like a very curious move in light of a shiny new RUC system being just over the horizon which would be better suited to balance their roading budget.

When all said and done the government have a complex puzzle to sort out with RUCs and to further complicate matters an election looming in the meantime. At some stage in the next 6 months or so we will learn how they're going to move on this but in the meantime they are very much keeping things under wraps by all accounts. Time will tell...

[harm_less]

Seems my earlier comments aren't too far off the mark. No doubt National have essentially 'copy/pasted' the progess so far of the behind the scenes planning and discussions on this matter but in any case it will make little difference who is at the helm next year insofar as these changes being implemented.

https://www.stuff.co.nz/national/politic...luding-evs