RUCs to apply to all vehicles (incl EVs), replacing road user tax on petrol

Forums › Transport (cars, bikes and boats) › RUCs to apply to all vehicles (incl EVs), replacing road user tax on petrol

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#3183865 19-Jan-2024 10:53

HarmLessSolutions:

]No, your reasoning is faulty. Presently the RUC rate is equivalent to that paid by a petrol vehicle with ~9.5L/100km consumption. If the FET is removed and replaced by a fixed RUC (assume $76/1,000km) any vehicle that uses more than 9.5L/100km will become cheaper to run than it is presently. The higher the consumption, the bigger the saving. That is the perverse outcome I was referring to but unfortunately the attitude of the current government toward emissions reductions and their shortcomings in thinking through the RUC system's cause and effect scenarios (e.g. the PHEV present debacle) may well miss this negative aspect.

That outcome is perfectly acceptable when you are talking road user charges. This is a cost to use the road, nothing to do with carbon or emissions.

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#3183866 19-Jan-2024 10:56

tdgeek:

My reasoning isnt faulty, I stated that "In practice, some drivers will see a decrease in costs others an increase"

I noted that comment of yours but that contradicts the "overall it just replaces A with B" disclaimer that follows it. RUCs are a generic charge irrespective of the fuel used to travel that distance so 'A' is not equivalent to 'B' in that respect.

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#3183869 19-Jan-2024 11:03

HarmLessSolutions:

No, your reasoning is faulty. Presently the RUC rate is equivalent to that paid by a petrol vehicle with ~9.5L/100km consumption. If the FET is removed and replaced by a fixed RUC (assume $76/1,000km) any vehicle that uses more than 9.5L/100km will become cheaper to run than it is presently. The higher the consumption, the bigger the saving. That is the perverse outcome I was referring to but unfortunately the attitude of the current government toward emissions reductions and their shortcomings in thinking through the RUC system's cause and effect scenarios (e.g. the PHEV present debacle) may well miss this negative aspect.

Be that as it may, the RUC is for road funding, not climate mitigation.

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#3183872 19-Jan-2024 11:17

HarmLessSolutions:

I noted that comment of yours but that contradicts the "overall it just replaces A with B" disclaimer that follows it. RUCs are a generic charge irrespective of the fuel used to travel that distance so 'A' is not equivalent to 'B' in that respect.

And it never can be when you change one formula for another. When you do that, there will always be winners and losers, and many who will be ballpark similar. You could make RUC fairer by having various rates in the 0-3500kg range rather than just one that covers everything to 3500kg. The 3499kg vehice gets off cheap at the expense of the tiny car, so that's an option. And was the fuel excise fair at the current rate? No idea, maybe it was too low or too high, so that makes it difficult to assess the new RUC as you are comparing it to an unrelated formula

End of the day, one formula is being replaced by another to "overall" be a replacement. So, overall A replaces B but its not an exact change

Maybe it would be fairer to scrap excise and scrap RUC for every vehicle, and add a Transport levy to every business and every individual taxpayer to generate the same transport revenue that exists today, given that everything we all do has a fuel/transport component.

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#3183875 19-Jan-2024 11:26

johno1234:

HarmLessSolutions:

No, your reasoning is faulty. Presently the RUC rate is equivalent to that paid by a petrol vehicle with ~9.5L/100km consumption. If the FET is removed and replaced by a fixed RUC (assume $76/1,000km) any vehicle that uses more than 9.5L/100km will become cheaper to run than it is presently. The higher the consumption, the bigger the saving. That is the perverse outcome I was referring to but unfortunately the attitude of the current government toward emissions reductions and their shortcomings in thinking through the RUC system's cause and effect scenarios (e.g. the PHEV present debacle) may well miss this negative aspect.

Be that as it may, the RUC is for road funding, not climate mitigation.

Absolutely RUCs shouldn't be used as an emissions reduction tool. My point is that by changing to a taxation system that is more equitable in terms of road use (vehicle distances travelled) rather than the fuel used to travel that distance there will be unintended consequences. The most obvious is that an economic disincentive for high fuel use is diluted if pump price is reduced.

$76/1,000km RUCs are equivalent to the FET (National Land Transport Fund, 70.024c/L +GST = 80.5c/L) collected from a petrol powered vehicle that consumes ~9.5L/100km. Therefore any petrol fueled vehicle that consumes more than that much fuel stands to gain as a result of RUCs being levied at a fixed km rate. The higher their consumption the more the reduction in their running costs compared to the present FET method of taxation.

That isn't disingenuous it logical mathematics. Someone else can put together a spreadsheet to detail the disparities that a change from FET to RUCs will result in. This unintended consequence is directly in conflict to any emissions mitigation measures we may be adopting. So far as I'm aware though NAF seemed to have reversed all such emissions focussed strategies but at some stage they have to do more than pay lip service to addressing climate change..... don't they?

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#3183880 19-Jan-2024 11:35

HarmLessSolutions:

Absolutely RUCs shouldn't be used as an emissions reduction tool. My point is that by changing to a taxation system that is more equitable in terms of road use (vehicle distances travelled) rather than the fuel used to travel that distance there will be unintended consequences. The most obvious is that an economic disincentive for high fuel use is diluted if pump price is reduced.

$76/1,000km RUCs are equivalent to the FET (National Land Transport Fund, 70.024c/L +GST = 80.5c/L) collected from a petrol powered vehicle that consumes ~9.5L/100km. Therefore any petrol fueled vehicle that consumes more than that much fuel stands to gain as a result of RUCs being levied at a fixed km rate. The higher their consumption the more the reduction in their running costs compared to the present FET method of taxation.

That isn't disingenuous it logical mathematics. Someone else can put together a spreadsheet to detail the disparities that a change from FET to RUCs will result in. This unintended consequence is directly in conflict to any emissions mitigation measures we may be adopting. So far as I'm aware though NAF seemed to have reversed all such emissions focussed strategies but at some stage they have to do more than pay lip service to addressing climate change..... don't they?

But the ute tax!

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#3183900 19-Jan-2024 11:49

johno1234:

Be that as it may, the RUC is for road funding, not climate mitigation.

Correct, and there is an explicit Emissions Trading Scheme levy on fuel of around 18 cents per litre of petrol that EVs and PHEVs can avoid, so the incentive to use a cleaner form of transport still exists even with the RUC changes. This levy is variable and depends on the carbon price, so as the carbon price goes up the incentive goes up.

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#3183901 19-Jan-2024 11:49

HarmLessSolutions:

No, your reasoning is faulty. Presently the RUC rate is equivalent to that paid by a petrol vehicle with ~9.5L/100km consumption. If the FET is removed and replaced by a fixed RUC (assume $76/1,000km) any vehicle that uses more than 9.5L/100km will become cheaper to run than it is presently. The higher the consumption, the bigger the saving. That is the perverse outcome I was referring to but unfortunately the attitude of the current government toward emissions reductions and their shortcomings in thinking through the RUC system's cause and effect scenarios (e.g. the PHEV present debacle) may well miss this negative aspect.

The unequal treatment for small fuel efficient vehicles from the current single band ($76/1000km up to 3.5 tonne) is well known and understood by policy makers,

[ although perversely it was this disincentive that saved NZ from the impact of "diesel gate" - as these cars never made it here in great numbers because they got slugged with the same RUC as a big diesel 4WD..)

The creation of the PHEV rate of $53/1000 indicates that they are open to creating more bands to allow lighter vehicles to pay less than the standard rate- thus helping sales of cars with consumption rates lower than 9.5L/100

But until we see an actual proposal for a Global RUC to replace FED we're all just spit balling....

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#3183906 19-Jan-2024 11:55

Clearly the only solution if we want to compare excise to RUC is to have one variable, km of road use. Did the previous Govt and the new Govt say that eventually it will be RUC only? Maybe a plan to make buying RUC as easy as possible needs to be thought up

My idea is every car gets a card, scan that and buy at the pump. Give everyone a chart to get a rough guide on what % extra to add to the petrol based on cc rating, then peeps can do easy topups as they fill up, so no surprises at wof time or police time or rego time

Maybe everyone needs to have a Waka Kotahi login for a RUC portal so they can keep tabs on it, if they wish. Give a internet payment option that they can set a regular payment, weekly or longer

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#3183908 19-Jan-2024 11:59

tdgeek:

And it never can be when you change one formula for another. When you do that, there will always be winners and losers, and many who will be ballpark similar. You could make RUC fairer by having various rates in the 0-3500kg range rather than just one that covers everything to 3500kg. The 3499kg vehice gets off cheap at the expense of the tiny car, so that's an option. And was the fuel excise fair at the current rate? No idea, maybe it was too low or too high, so that makes it difficult to assess the new RUC as you are comparing it to an unrelated formula

The roading degradation effects of a 1,000kg or 3,500kg is negligible if any which is why the current 3.5T cut-off exists.

FET or RUCs for that matter are not set at the levels they are for reasons of what is fair so much as what generates sufficient funds to fulfill their reason for existing (i.e. cover roading maintenance and development, and safety initiatives) and the changes currently underway are the perfect time to redress any shortfall in this regard. The problem is when a fuel consumption based tax is replaced with a distance travelled based charge there will be unintended consequences that must be catered for. The hybrid RUC/FET system we have in place is currently acting in part as a disincentive towards high consumption (where it exists as FET). By changing to a distance based tax for all the previous disincentive is reduced which will essentially penalise low emission vehicles to the advantage of 'gas guzzlers'.

Replacing the previous FET at least in part with increased carbon (ETS) taxation will impact the highest consuming (and therefore emitting) vehicles the most but also fossil fueled vehicles in general, which in today's world where limiting emissions is increasingly regarded as essential and to fail to do so can potentially restrict international trading opportunities seems like the most logical action to take.

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#3183914 19-Jan-2024 12:15

HarmLessSolutions:

The roading degradation effects of a 1,000kg or 3,500kg is negligible if any which is why the current 3.5T cut-off exists.

FET or RUCs for that matter are not set at the levels they are for reasons of what is fair so much as what generates sufficient funds to fulfill their reason for existing (i.e. cover roading maintenance and development, and safety initiatives) and the changes currently underway are the perfect time to redress any shortfall in this regard. The problem is when a fuel consumption based tax is replaced with a distance travelled based charge there will be unintended consequences that must be catered for. The hybrid RUC/FET system we have in place is currently acting in part as a disincentive towards high consumption (where it exists as FET). By changing to a distance based tax for all the previous disincentive is reduced which will essentially penalise low emission vehicles to the advantage of 'gas guzzlers'.

Replacing the previous FET at least in part with increased carbon (ETS) taxation will impact the highest consuming (and therefore emitting) vehicles the most but also fossil fueled vehicles in general, which in today's world where limiting emissions is increasingly regarded as essential and to fail to do so can potentially restrict international trading opportunities seems like the most logical action to take.

Yes, I know all that. For road funding, RUC works. Make it RUC only for all vehicles, problem solved, for road funding

If there are unintended consequences. Well actually there isnt, as its about road funding not climate change and the emissions that cause climate change. That is another topic that a Govt can deal with if it so chooses to favour green fuels. If ETS increases add that to fossil fuel at the pump, then you can have a solution for emissions, if the Govt chooses but RUC is only about roading infrastructure support

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#3183915 19-Jan-2024 12:19

This reform, seem incomplete to me. PHEVs are paying RUC (at reduced rate) plus petrol taxes.

Moving to petrol vehicles paying RUC (and removing the road user taxes from petrol) would address this issue.

As far as the rate of RUC for EVs, there is no reason I can see for it to be different form light diesel. I don't think there is any reason to suspect they cause more or less wear and tear than petrol or diesel vehicle. Looking at a few kerb weights, EVs seem to be quite heavy for their physical footprint.

If the motivation for a differential is emissions, there is provision for emission charges at pump, which seems a direct and appropriate mechanism for addressing emissions that would capture all uses.

Mike

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#3183932 19-Jan-2024 12:51

MikeAqua:

This reform, seem incomplete to me. PHEVs are paying RUC (at reduced rate) plus petrol taxes.

Moving to petrol vehicles paying RUC (and removing the road user taxes from petrol) would address this issue.

As far as the rate of RUC for EVs, there is no reason I can see for it to be different form light diesel. I don't think there is any reason to suspect they cause more or less wear and tear than petrol or diesel vehicle. Looking at a few kerb weights, EVs seem to be quite heavy for their physical footprint.

If the motivation for a differential is emissions, there is provision for emission charges at pump, which seems a direct and appropriate mechanism for addressing emissions that would capture all uses.

I think that what we have now is them pushing thru their election promise of making EVs pay. To put all cars onto RUCs at once would totally overwhelm things.

I would expect that we will see it done in batches when they finally do add RUC to everything. Hopefully they have a better system by then than the printed paper tickets you need to pick up at a post shop or have mailed to you, because that is inefficient as anything.

Richard rich.ms

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#3183934 19-Jan-2024 12:56

richms:

MikeAqua:

This reform, seem incomplete to me. PHEVs are paying RUC (at reduced rate) plus petrol taxes.

Moving to petrol vehicles paying RUC (and removing the road user taxes from petrol) would address this issue.

As far as the rate of RUC for EVs, there is no reason I can see for it to be different form light diesel. I don't think there is any reason to suspect they cause more or less wear and tear than petrol or diesel vehicle. Looking at a few kerb weights, EVs seem to be quite heavy for their physical footprint.

If the motivation for a differential is emissions, there is provision for emission charges at pump, which seems a direct and appropriate mechanism for addressing emissions that would capture all uses.

I think that what we have now is them pushing thru their election promise of making EVs pay. To put all cars onto RUCs at once would totally overwhelm things.

I would expect that we will see it done in batches when they finally do add RUC to everything. Hopefully they have a better system by then than the printed paper tickets you need to pick up at a post shop or have mailed to you, because that is inefficient as anything.

According to the National Act coalition agreement (p6) "Work to replace fuel excise taxes with electronic road user charging for all vehicles, starting with electric vehicles."

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smac

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#3183935 19-Jan-2024 13:00

Yes unfortunately they say work.....rather than a working solution! I doubt NZTA can move as far as that this term.....

All this coalition has done so far is can a bunch of previous work, nothing resembling any way forward.

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