National proposes axing fuel taxes, increasing funding for transport if it wins in 2020

National is thinking about axing fuel taxes completely if it wins office in 2020. 

Its Transport Spokesperson Chris Bishop will today release the party's transport discussion document, which proposes a move away from fuel taxes as the primary way of funding road building in New Zealand.

New Zealanders currently pay 66 cents per litre of tax on a litre of unleaded 91 petrol. Bishop would like to reduce that over the medium to long term to zero.  

Fuel excise duty (fuel tax) is a hypothecated tax for roading, meaning the money collected by fuel taxes goes directly into the National Land Transport Fund (NLTF), where it is spent on building and maintaining roads. 

A fuel tax is used as a proxy to charge road users for building and maintaining roads based on how often a driver uses them.

Bishop said that better fuel economy standards and uptake of hybrids and electric vehicles had undermined the principle of a user-pays roading system.

He said it was time to "move away from fuel tax as a proxy to road use".

National is proposing a transition to funding the NLTF through road user charges (RUC), which are currently used by diesel and heavy vehicles like trucks.

The RUC is charged on motorists per kilometre travelled, and is paid for by the motorist in advance. 

Bishop argued that new technology will mean RUCs, charging motorists for each kilometre travelled could be rolled out for all road users over time.

He said switching to RUCs would save New Zealand from a looming crisis in the way we fund road construction. 

Transport Spokesman Chris Bishop has proposed axing fuel taxes.

KAI SCHWOERER/GETTY IMAGES Transport Spokesman Chris Bishop has proposed axing fuel taxes.

Currently, the NLTF receives roughly £4 billion a year for road construction and maintenance, but this will likely decrease as better fuel economy reduces the amount of petrol people use and EVs come to dominate the market. 

EVs currently pay no RUC or fuel tax, although their exemption from RUCs expires in 2021. 

Bishop said that the changes would mean some motorists would pay more and others less after fuel taxes had been phased out. 

"Some will pay more and some will pay less in the medium to long term.

People who use the road more will pay more," Bishop said. 

Chris Bishop and Nicola Willis launched a campaign to bring forward construction of an extra Mt Victoria tunnel.

ROBERT KITCHIN/STUFF Chris Bishop and Nicola Willis launched a campaign to bring forward construction of an extra Mt Victoria tunnel.

While National has promised to repeal the Auckland Regional Fuel Tax and not to increase other fuel taxes in its first term, the transport policy ideas are currently only at the stage of discussion. While they give an indication of areas the party is looking at, they don't yet represent party policy. 

Bishop also proposed increasing the share of Crown funding for roading and the use of Public-Private-Partnerships to plug the infrastructure deficit. 

National is also looking at whether to allow councils to introduce congestion charging.

Councils have been clamouring for congestion charging, which would allow them to fund their own transport projects, but the current Government has so far ruled it out.

A congestion charge works by charging a fee for motorists to enter a particular part of a city, usually the CBD. Bishop is soliciting feedback on whether a future National-led Government should allow councils to use it here. 

He said he would be open to allowing it in main centres where there were alternative public transport options available. He thought the charges could be higher at certain times of day - like rush hour - to encourage people to use public transport. 

The party has also set its sights on the Government's "feebate" scheme to encourage people to buy EVs.

The feebate works by putting a fee on petrol vehicles which is used to subsidise electric or fuel efficient vehicles.

Bishop said the party "rejected" that policy as "it's complicated and too punitive".

Instead, he proposed moving to a fuel economy standard, based on the kinds of cars that were likely to be imported to New Zealand. 


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