Govt confirms 1 October fuel tax changes

Transport Minister Steven Joyce has today confirmed that the previously announced increases in fuel excise duty (FED) on petrol and road user charges (RUC) will take effect as scheduled from 1 October.

The 3 cent per litre increase includes an annual increase of 1.5 cents per litre scheduled by the previous government. The additional 1.5 cents partially replaces the previously planned regional fuel taxes.

Mr Joyce says the increases will flow into the hypothecated National Land Transport Fund and assist investment in transport projects throughout the country.

"The additional revenue from these increases will contribute to the billion dollars that will now be spent on our state highway infrastructure each year.

"That ongoing investment is crucial in assisting economic growth and will enable greater productivity to be gained from the transport network."

While the FED increase is 3 cents per litre for all vehicles, the RUC increase will vary depending on the size of the vehicle.

"We are starting to reflect the conclusions of the recent RUC review in these adjustments," says Mr Joyce.

For an average two tonne diesel car, the October 1 increases will result in an average additional cost of $3.61 per 1,000 kilometres driven. A larger vehicle such as a 3 tonne SUV will cost an extra $3.70 to drive 1,000 kilometres, or 0.37 cents per kilometre. These are expected to increase total running costs by between 0.4 and 0.8 percent.

For heavy vehicles the exact RUC increase will depend on vehicle size and axle configuration. Typical large truck and trailer combinations will pay between 3 and 6 percent more in RUC. The maximum increase for any diesel vehicle is 10 percent, and the average is 7 percent.

The Road User Charges Amendment Act which was passed earlier this month, requires 42 days notice to be given for road user charges increases, allowing transport operators time to budget for increased costs. RUC licences for vehicles over 3.5 tonnes bought at the old rate will expire a month after the new rate takes effect.

Refunds of road user charges for unused kilometres will be automatically provided at the time a new licence is purchased.