The new transport minister has received recommendations for how to charge hybrid and electric vehicle owners for road usage, but whoever is in government after October 14 will likely decide
More than $600 million of revenue has already been forgone after road user charges and fuel excise was reduced by the Government, and now decisions need to be made on how to make plug-in hybrids and electric vehicles pay their fair share.
In January 2022 the Ministry of Transport released a consultation document reviewing the road user charges (RUC) system. Submissions closed in April 2022.
The ministry put together recommendations for how to consider climate change, simplify compliance and make better use of technology when it comes to road user charges, which is now sitting with Transport Minister David Parker, who took on the portfolio in June after the resignation of Michael Wood.
Part of the consultation was how best to deal with electric vehicles and hybrids, which are currently exempt from paying RUCs through until March 31.
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Under the current settings light battery EVs and plug-in hybrids will be subject to the RUC rate of their diesel-powered equivalents when the exemption ends.
That would mean paying a rate of $76 per 1000km, although petrol-powered plug-in hybrids would be entitled to claim fuel excise duty refunds through Waka Kotahi to avoid being double charged.
The consultation document sought feedback on implementing a partial rate for vehicles that are also subject to fuel excise duty (FED). It also noted the option of an extension to the March 31 exemption for light EV vehicles.
As of September 2021, about a quarter of the light EV fleet were plug-ins and the compliance involved with processing fuel excise duty refunds for both the vehicle owners and Waka Kotahi would only increase as that number continued to grow.
“This can be administratively complex to claim. It would be simpler if owners of these dual fuel vehicles could pay a lower rate of RUC that recognises the amount of FED also being paid.
“This would mean the owner then not need to keep receipts and make a separate claim for a refund. Not having to process FED refund claims would also reduce the compliance costs for Waka Kotahi,” according to the ministry report.
It went on to say a roadblock to a reduced rate was that legislation currently didn’t enable that to be done.
An example of how a partial rate might work is that for plug-in petrol-powered hybrids a rate would be set at 80 percent of the standard rate to recognise that on average 20 percent of travel was made using petrol.
The ministry noted that was an indicative figure and was “not based on any specific research”.
The report acknowledged some vehicle owners would travel on petrol more, or less, than that example offered.
It meant a decision would need to be made on whether vehicle owners would be able to claim any additional amount over the partial rate and what details would be needed to collect it. That would in turn reintroduce the administrative burden that exists under the current settings.
The AA, in its feedback, supported a partial rate as it would be “administratively more efficient” than the current settings of a full rate and refunds on fuel excise duty.
Parker told Newsroom he hadn’t taken any recommendations to Cabinet, but a decision would need to be made before the exemptions come to an end on March 31.
He said he’d been presented with different options and would take a preferred one to Cabinet, “but I’m not sure whether that will be before we rise for the election or after”.
National’s transport spokesperson Simeon Brown said the preference was that all electric vehicles were charged through RUCs eventually, once they made up 2 percent of the light vehicle fleet, which is expected to be around April next year.
He said a reduced rate for hybrids seemed the “cleanest” way of dealing with it but if a full rate with an ability to claim back fuel excise was needed as an interim measure, he’d support that.
But he told Newsroom he’d like to see fuel excise eventually scrapped and all vehicle owners charged through road user charges.
Both RUCs and FED make up the bulk of funding collected and put into the National Land Transport Fund, which pays for state highways and motorways, half of local road, cycling and walking infrastructure and public transport subsidies.
That fund has become increasingly unsustainable with $635 million forgone in the 2021-2024 period because of the cost-of-living package in which road user charges and fuel excise duty paid by motorists were reduced.
Those reductions have now ended as of the end of June and the next step is to get all vehicles, including those currently exempt, paying into the fund in future.
