Scrapping RUC and paying Diesel tax at the pump?

Forums › Transport (cars, bikes and boats) › Scrapping RUC and paying Diesel tax at the pump?

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#1998812 18-Apr-2018 18:17

davidcole:

Coil:

tripper1000:

elpenguino:

All of those non-road uses of diesel are a small minority compared to the on-road uses. You don't build a system around the minority.

Keep it simple, charge everybody at the pump.

64% of diesel was used on road (2008). The minority is not insignificant.

Reference.

God I'd hate what it would cost for me to fill the game boat with 2.4 tonnes of diesel if there were road tax on it...

Lots of diesel is used off the road. A fact of that is most of the diesel used off the road is consumed at a much greater rate than a road going diesel engine could manage.
The diesel burn on a D10 dozer or 3000HP of boat at 32 kts burning 200L a side (400L total) per hour makes your eyes water.

Try petrol or Av Gas powered race boats (Water ski racing). 2L a minute I used to go through....thankfully petrol at the time was 90c.

On both engines combined doing 6.6L per minute. $10~ per minute ($600 per hour) not including maintenance haha. That is tapped out, idling around at 15 kts uses SFA. However, Those diesels will do full speed all day every day. Not too sure about ya petrol :).

I have a friend who has a big block shaft driven speed/ski boat. Uses about that haha. Not cheap but sounds good..

JimmyH

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#1998876 18-Apr-2018 18:52

RunningMan:

Geektastic:

Can you buy 100 octane here? The closest I have seen is the $2.29/l 98 that our BP sells in the village.

Yes, but it is leaded - for aviation and/or motorsport use.

The garage near where I used to live used to sell it. I recall that the pump was locked, and you had to ask for an attendant (and presumably there were some tax complications depending on use?).

I have certainly put 100 octane into a light aircraft from a pump at an aero club, but that was some years ago.

Aredwood

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#1998956 18-Apr-2018 20:27

elpenguino:
A model where you pay based on ownership is simpler to administer - paying your annual fees in one hit will make a lot of us gulp though.

Very bad idea. As it will be a subsidiy to Uber. And it will unfairly penalize people who use public transport for most of their transport needs. But who still need to have a car for occasional use.

It will also reduce the uptake of electric cars. As people will be less likely to buy an EV to cover some of their transport needs. As it will be cheaper to own 1 ICE car instead of an EV and a ICE.

Jase2985

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#1998971 18-Apr-2018 20:55

Coil:

God I'd hate what it would cost for me to fill the game boat with 2.4 tonnes of diesel if there were road tax on it...

Lots of diesel is used off the road. A fact of that is most of the diesel used off the road is consumed at a much greater rate than a road going diesel engine could manage.
The diesel burn on a D10 dozer or 3000HP of boat at 32 kts burning 200L a side (400L total) per hour makes your eyes water.

childs play :P try 6 tonnes an hour (6850L)

Dratsab

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#1999049 19-Apr-2018 07:56

JimmyH: Diesel is different. Most diesel is consumed by vehicles that pay differential RUC rates because of weight (heave trucks do more damage to the road than light vehicles), and non road users like farm vehicles and fishing vessels. That being the case, it's just too complex to simply tax the fuel.

MikeAqua: Seems unreasonable for a coastal ship or a diesel train to pay road user charges at the pump when it is entirely incapable of using the road.

BlueShift: Much of that diesel will be for uses that don't buy it from their local Z station. Shipping, rail, construction, etc. Having the diesel bowsers at the marina and the railyards dispensing diesel without road tax isn't that hard. Enforcing specific uses with large fines for diverting it to road vehicles isn't that tricky. Have a tax-refund system in place for those who fill up at the petrol station and can prove non-road use.

Quite agree with Blueshift. The farm use, ships and trains is a red-herring imho - I can't remember the time I last saw the latter two filling up "at the pump" which is what this discussion is about. They have a direct supply relationship. Farm vehicles, pay tax too and declare your usage to receive a decent tax credit for the major contribution to the economy, with the remainder being diverted for environmental cleanup projects.

MikeAqua

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#1999067 19-Apr-2018 08:25

BlueShift: Much of that diesel will be for uses that don't buy it from their local Z station. Shipping, rail, construction, etc. Having the diesel bowsers at the marina and the railyards dispensing diesel without road tax isn't that hard. Enforcing specific uses with large fines for diverting it to road vehicles isn't that tricky. Have a tax-refund system in place for those who fill up at the petrol station and can prove non-road use.

At what point is the tax on petrol currently applied? Is it at the point of retail, on tanker delivery or when it's imported/refined?

Mike

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elpenguino

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#1999104 19-Apr-2018 09:04

Aredwood:
elpenguino:

A model where you pay based on ownership is simpler to administer - paying your annual fees in one hit will make a lot of us gulp though.

Very bad idea. As it will be a subsidiy to Uber. And it will unfairly penalize people who use public transport for most of their transport needs. But who still need to have a car for occasional use.

That's why I said it was both fair and unfair to charge on an average annual mileage basis.

Even if you charge Road tax at the pump it is still fair and unfair.

If I walk to work 5 days a week, that means on the weekend when I use my car, all the commuters have contributed to the roads more than I have. That taxi driver is over contributing.

It will also reduce the uptake of electric cars. As people will be less likely to buy an EV to cover some of their transport needs. As it will be cheaper to own 1 ICE car instead of an EV and a ICE.

I'm not in favour of every human in the world owning one car let alone two, so I don't have a problem if people want to own one car!

The reason why I tend towards charging at the pump is that makes it very hard for people to avoid the tax. If you look around you will see many cars with lapsed registrations and there are all sorts of tricks to reduce your odometer mileage.

If you need fuel to make your car work every day, boom, you've paid the tax, job done.

EVs will be the sticking point for a uniform solution. We'll probably end up back with paying money at the post office or online.

Most of the posters in this thread are just like chimpanzees on MDMA, full of feelings of bonhomie, joy, and optimism. Fred99 8/4/21

Dratsab

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#1999114 19-Apr-2018 09:16

MikeAqua:

BlueShift: Much of that diesel will be for uses that don't buy it from their local Z station. Shipping, rail, construction, etc. Having the diesel bowsers at the marina and the railyards dispensing diesel without road tax isn't that hard. Enforcing specific uses with large fines for diverting it to road vehicles isn't that tricky. Have a tax-refund system in place for those who fill up at the petrol station and can prove non-road use.

At what point is the tax on petrol currently applied? Is it at the point of retail, on tanker delivery or when it's imported/refined?

Actually, that's a damn good question, so I've had a quick look. This chart shows almost all of it (columns A & B) is classed as excise tax whilst columns D-F, which make up a small amount, are other types of levies and taxes which would appear to be collected at the point of sale (POS). Obviously there's the various other margins that go on top of this (importer, retailer) and another 15% GST on top of the final product.

Given at some taxes are already collected at POS, I would imagine it'd be particularly difficult to implement a volumetric POS tax for diesel to replace RUC. Difficulties would come in around diversion of diesel, especially by lifestyle block owners around the fringes of cities who have a few livestock and could thereby classify themselves as farmers and could fill up at designated non-tax points (ie truck stops) or receive tax credits.

All pie-in-the-sky stuff though, tbh. I can't see the status quo changing.

empacher48

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#1999146 19-Apr-2018 09:39

Everyone here is talking about diesel, which is fair enough. It is the most common vehicles to have RUC.

I personally know of a handful of people who have large petrol powered motor homes (over 3500kg GVM) who have to pay RUC on top of the petrol excise.

Thinking forward to the future. (I’m thinking 2030 and beyond) when electric vehicles are the normal. How are we paying for roading? Is it easier to pay RUC, which by that time may be electronically collected and paid as the vehicle moves (ie every km the car travels 62 cents is automatically withdrawn from your bank account). Or will we all have buy a new power meter and have it wired so the charging points for the electric car so the power companies can charge a rate which includes an excise for roading?

We never get something for nothing and one thing the government will figure out a way to tax us, no matter what!

NzBeagle

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#1999150 19-Apr-2018 09:44

Current RUC methods, old fashioned or modern GPS solutions, are at least allocated based on use. Perhaps we should punish those who choose less efficient forms of transport, but what about those who can't choose based on affordability? RUC based on distance traveled is transparent, and can be applied in future to EV as has been discussed.

Maybe for Petrol in the near future too, as those running >20km per litre get away lightly compared with the <20km per litre group.

The administration of this could be made easier as others have discussed, and electronic solutions may not suit everyone.

Scott3

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#2001352 24-Apr-2018 01:05

There is one major point that seems to have been missed from this discussion:

Rebates for off road use will be available for the 10c/L regional fuel tax (which will be applied on petrol & diesel). (if is is passed in its current form)

The above is huge, (its why I put it in bold). The sweet thing about the NZ RUC system currently is it's simplicity. Petrol stations only need one diesel browser (no UK style "red" fuel), Industrial sites, farms etc only need one tank, and there is no need for businesses to worry about how much fuel the company hilux burnt, compared to their diesel generator. No rebates were available for diesel, so no paperwork is required.

I had assumed, that no rebates would be available (higher priced fuel for your generator is the price of having better infrastructure in your region).

Under the new system, all off road users of diesel would need an audit-able trail of paperwork to prove eligibility for the rebate. Take your typical farm tank (no flow meter) which runs the tractors, and the road legal utes... How will that user claim rebates, (will they need to buy weights & measures approved flow meters, and keep logs?). Alternatively we could go the UK way, and have taxed, and untaxed (red) diesel at the pump, and massive fines if you are caught with red dye in your car's tank...

If we have accepted the costs (and evasion risk) that go along with processing diesel tax rebates, the main advantage of the RUC system is gone... might as well tax at the pump, with a supplementary RUC for heavy vehicles...

<quote>Will there be a rebate system for other off-road users of fuel?

Yes. The NZ Transport Agency is hard at work to implement a rebate system for fuel
(both petrol and diesel) used in dedicated off-road vehicles or other commercial offroad
use, such as fuel used on farms. Where a person can claim a refund for fuel
excise duty, they should also be able to claim a rebate for regional fuel tax</quote>
https://www.transport.govt.nz/assets/Uploads/Land/Documents/RFT-QAs-March-2018.pdf

The other big issue we have is the distortion that having some fuels taxed per liter (Petrol, LPG), and some taxed per KM (everything else).

In short, if your chosen vehicle with a petrol engine (if offered) gets less than something like 8L/100km in the real would, then you pay less in road tax than the the diesel version (if offered).

The above absolutely kills the economics of small diesel cars (Suzuki swift, VW polo etc). As a counterpoint, it means a big vehicle with poor aerodynamics (say a van, or ute) would pay a small fortune in road tax if running petrol.

The NZ car market has evolved to suit the above artificial tax distortion. Small cars like the swift, corolla, VW polo, and VW Golf are no longer offered in diesel. Large vehicles, like the Ranger ute are offered exclusively with diesel engines.

Actually the above distortion has worked out great for NZ, The distortion means that the majority of our small cars are petrol, and most of our current taxi fleet are toyota hybrids (in much of europe they are mostly diesel cars). The world has now learnt diesel fumes cause cancer, European cities have learnt the hard way that while diesel's are good for reducing CO2 emissions, they are cause smog, and are bad for the health of your population.

Utes etc, tend to spend less time in urban centers proportionally that say Toyota Prius's, so air quality is a lesser concern.

Unfortunately when the current RUC exemption for Electric cars ends in 2022 (if not extended), this distortion will start working against us. An electric vehicle will pay 6.2c/100km in road tax. A petrol hybrid Toyota Prius at 3.5L/100km, will pay around 2.3c/100km in road tax (with $2.20 petrol running will cost 7.7c/km in fuel & tax). If we want to encourage electric vehicles (I think we do given I would rather have NZ use locally produced electricity than imported oil) then we need to rethink RUC's, Charging EV's 2.5 times the road tax works against this....

----------------------------------------

Less relevant to the topic, but it is interesting to note that how the current rebate system works.

In short you can get rebated for any off road commercial petrol use, And rebates for any petrol used in a Heavy vehicle that is paying RUC's (private or commercial).

Counter to a post above, your big (over 3.5T GVM) american V8 motor-homes can claim back petrol tax.

Recreational Boaties get screwed if they are running petrol, and most do as almost all outboard engines are petrol, and outboard engines are desirable for the common NZ runabout style of boat. This distortion, means almost every boat that suits an inboard engine (outside of jet & ski boats) has diesel power. If we got rid of this distortion, we would see a lot more small to mid size launches with outboards hung on the back.

Yes, non-commercial lawn mowers, and chainsaws use fuel too, but the amount is small compared to recreational boating.

--------

I don't know much about aircraft, but my understanding is AV-Gas and Jet A1 are not taxed, but if you want to burn auto gas in your recreational aircraft, you cannot claim a rebate.

Important to note that Av-gas still has TEL (lead) in it. Frankly this is appalling given the we now know how badly it affects the human brain. The aviation industry needs to sort this out ASAP.

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MikeAqua

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#2001367 24-Apr-2018 08:09

Scott3:

Rebates for off road use will be available for the 10c/L regional fuel tax (which will be applied on petrol & diesel). (if is is passed in its current form)

....

Recreational Boaties get screwed if they are running petrol, and most do as almost all outboard engines are petrol, and outboard engines are desirable for the common NZ runabout style of boat. This distortion, means almost every boat that suits an inboard engine (outside of jet & ski boats) has diesel power. If we got rid of this distortion, we would see a lot more small to mid size launches with outboards hung on the back.

If I interpret yoru post correctly now diesel boat users in Auckland will also get screwed. If it's on a trailer I guess you would just tow it outside of the Auckland area and fill up the boat and tow vehicle. Services stations just over the border will do well out of a regional fuel tax.

The regional fuel tax will be raking it in from non-trailerable recreational diesel boats.

Mike

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#2001382 24-Apr-2018 09:05

elpenguino:

EVs will be the sticking point for a uniform solution. We'll probably end up back with paying money at the post office or online.

It's easy enough to get the telematics in modern cars to talk to a remote server and upload mileage at regular intervals. Maybe it should be a requirement.....along with reporting peak speeds for speedy application of appropriate fines. Though if cars are automated, that aspect will fade away.

I suspect there are no RUCs on EVs at the moment as designing a tax system for them when in small numbers wouldn't be worth the cost. Plus EVs currently encompass pluggable hybrids and pure electric. They pay tax on the fuel, but not on the electricity.....so it gets complicated as to what powered which kilometer (or portion thereof).

Ultimately it may come down to tolls on roads........mainly because growth will drive policy toward more "compressed" mode of transport like buses and rail to move more people through the same corridors more quickly and without congestion.

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Jase2985

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#2001385 24-Apr-2018 09:14

MikeAqua:

Services stations just over the border will do well out of a regional fuel tax.

unlikely as the distance most people will have to travel will offset the saving of the fuel tax. so you will end up paying more for the false economy.

if you live close to the border it may work in your favour but for people in auckland its self unlikely

wellygary

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#2001412 24-Apr-2018 09:41

The proposed legislation is here

http://www.legislation.govt.nz/bill/government/2018/0038/latest/whole.html#LMS24592

and from a cursory glance it is a dog's breakfast, lots of "If A knows B is going to transport fuel into the region than A must include the tax on fuel supplied to B" - how a fuel supplier can "know" what a national trucking operator or delivery company is doing with its fleet is laughable,

I get the feeling that lots of commercial vehicles are about to get reregistered to outside Auckland addresses,

Also a big kicker is that types of exemptions can be granted by regulation, so there is going to be a huge queue outside ministers offices as every man and his dog argue that their use ( Bus operators, taxis, ubers, etc ) should be exempt,

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