Tuwhenuaroa
Natanahira Political reporter
The
government has delayed increases to fuel taxes by one year
and will use its fuel crisis rainy day fund to help pay for
it.
Fuel excise taxes were due to be increased by 12
cents from 1 January 2027, then increase annually by 6 cents
and 4 cents heading into 2029 – a total increase of 22
cents.
Instead, the tax will go up by 5 cents every
six months, beginning in 2028 through the end of 2029 – a
total increase of 20 cents.
To keep up with
maintenance and planned projects, the government will top up
National Land Transport Fund – expected to cost $1.476
billion over the forecast period.
Cabinet has agreed
to use its $450 million rainy day fund created in this
year’s Budget to help cover that – and will find the rest
elsewhere.
At the time the fund was announced, the
government said it would be used for “potential future
temporary and targeted responses to the fuel crisis if
required”.
Fuel excise taxes have not been increased
since 2020.
Speaking to media, Transport minister
Chris Bishop said without that “top up” to the National Land
Transport Fund, there would be “significant” cuts to road
maintenance, public transport and infrastructure
investment.
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“We’re giving motorists a full year
without the fuel tax increase they were expecting, while
protecting investment in our transport system and putting it
on a more sustainable funding path for the future.
“
Prime Minister Christopher Luxon denied that the
upcoming election was a factor in delaying the tax
increase.
“We were signalling pretty strongly about it
being unlikely for January 1 as we came through the Iranian
fuel crisis, and that has been the reality… you’ve seen
our government respond to changing circumstances and
changing geopolitics,” he said.
Bishop said the
country “understands the difficult
situation”.
“Everyone can see the need for investment
in the roading network and our public transport system… at
the same time, nobody wants to pay higher petrol
tax.
“That’s completely logical, particularly at a
time when we’ve been come through a very difficult five
years for the country – everyone can see that.”
The
Labour Party promised last week it
would not increase fuel tax at all over the next
term.
Bishop said Labour was just “hoping for the
best” by freezing the tax for another three
years.
“The Labour Party plan of just basically hoping
for the best and freezing things for another three years –
which creates a $4.6 billion hole in the National Land
Transport Fund – is irresponsible.
“Our path is a more
predictable, responsible path, and yes, it comes with some
fiscal cost.”
Bishop said the additional $1 billion
dollars needed to make up the projected cost of delaying the
tax would be shown in the upcoming pre-election fiscal
update
(PREFU).
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