Petrol excise, road user charges increases

Transport Minister Gerry Brownlee has today confirmed increases in petrol excise duty of two cents a litre and an equivalent increase in road user charges of an average of 4.1 per cent.

The increases will take effect from 1 August and the additional revenue will go into the National Land Transport Fund to assist investment in transport projects throughout the country.

An increase in petrol excise duty and road user charges of 1.5 cents a litre was originally scheduled to take effect in July 2011.  However, the government deferred the increase due to the challenging economic circumstances New Zealand was experiencing as it continued to recover from the global financial crisis and the Canterbury earthquakes.

“This increase is effectively a catch-up to ensure there continues to be sufficient revenue available to meet the government’s land transport expenditure targets,” Mr Brownlee said.

“The funds raised will contribute to the annual $1 billion investment in developing the country’s state highway infrastructure, which is crucial in assisting economic growth and enabling greater productivity from the transport network.”

A two cent increase in petrol excise duty will increase average running costs for an average petrol vehicle by around $30 a year, or 0.9 per cent. The financial impact is similar for a light diesel vehicle subject to road user charges.

The cost of road user charges represents about a tenth of the total costs of a road freight operator, therefore an average road user charges increase of 4.1 per cent is estimated to increase the total cost of truck operation by around 0.4 per cent.

The 4.1 per cent average increase is distributed in accordance with the Ministry of Transport cost allocation model, which allocates costs between vehicles of different types and weights, according to the costs they generate for the road network.

Mr Brownlee has also today announced regulations for new road user charges vehicle types and weight bands and exemptions.  These are part of the new road user charges system that will come into effect on 1 August 2012.

“Changing vehicle weight definitions means all vehicle types will have a different charge.

“Some individual vehicles will cost more to operate and some less than they do at present.”

The effect of the new types and weight bands is relatively small for lighter vehicles, but may result in major differences in charges payable for vehicles of over six tonnes gross vehicle mass.

All revenue from petrol excise duty and road user charges goes into the National Land Transport Fund along with revenue from motor vehicle registration and licensing fees.  The fund was approximately $2.65 billion 2010/11 and was spent on the following activities:

Further information on petrol excise and road user charges increases and new road user charges regulations is available on the Ministry of Transport website: www.transport.govt.nz