Yes fuel tax should go

Stuff reports:

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.

Fuel tax has been a good proxy in the past for user pays for roads, because it was near impossible to track individual vehicle usage. But now it is very simple to have vehicles record how far they travel, on what roads, and even at what time.

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. 

Also agree. A congestion charge at peak times is a good form of user pays.