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RUC Changes Mean Polluting Vehicles Pay Less Than Clean EVs

The changes to Road User Charges being implemented by the Government incentivise buying polluting vehicles over clean cars, says Better NZ Trust spokesperson Rob Birnie.

“The new system will see many petrol-fuelled cars paying less to use the roads than EVs. The Better NZ Trust is supportive of everyone on our roads fairly contributing to the upkeep and maintenance of our roads, however the changes proposed by the Government do not come close to accomplishing that goal,” says Birnie.

The changes will result in RUC being charged on Battery EVs (BEV) and Plugin Hybrid EVs (PHEV) starting 1 April 2024. BEVs will be charged at the existing rate of $76 per 1000km, while PHEVs will pay $56 per 1000km. Petrol and non-Plugin Hybrids, on the other hand pay 89c a litre in Fuel Excise Duty and related charges. This means petrol burners pay under $76 per 1,000km in Fuel Excise Duty if their fuel efficiency is better than 8.5l per 100km.

“The Government’s changes to RUC will result in New Zealanders paying highly varied amounts of tax towards supporting our roads, artificially promoting some fuel types over others and distorting the market. This same Government previously claimed that ‘unfairly taxing’ segments of the population was a serious enough matter to scrap the world-leading Clean Car Discount, but is now implementing policy which will introduce huge inequities into how vehicles are taxed.

“Some EVs will pay more than twice as much in RUC as they would if the owner were to have bought a more polluting hybrid vehicle of the same make and model. Even many traditional petrol vehicles will pay less tax than EVs under this new scheme.

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For example, a 2023 Hyundai Kona EV would pay $7.60 in RUC for 100km of mileage under the new policy, while the petrol version of the same vehicle would pay $6.50 and the hybrid version would pay only $3.83 in Fuel Excise Duty. This equates to nearly $600 of additional cost annually for the EV owner over the owner of a hybrid doing the same distance each year.

“These changes will encourage New Zealanders to purchase dirtier vehicles, locking in decades of additional emissions. In the middle of cost of living and climate crisis, this is the last thing Kiwi families' need, as it will hurt their wallets now, and their children’s wellbeing in the coming years.

“We would like to see a road tax system that appropriately accounts for all the intricacies of the vehicles that use our roads, not one based solely on what fuels each vehicle. We would encourage the Government to read the road conditions, slow down, and take a new route to get Kiwis to a solution that is fair for all road users," says Birnie.

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