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

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#3127147 13-Sep-2023 15:04

A breakdown of petrol pricing components might be useful at this stage

https://www.aa.co.nz/cars/owning-a-car/fuel-prices-and-types/petrol/

https://www.harmlesssolutions.co.nz/

networkn

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#3127160 13-Sep-2023 15:52

If you separate the Tax from the 'Fuel' then expect that there will be those, usually in the lower income brackets, who will treat it as optional or 'pay' later, as it saves them money 'now'.

There will be fines for not keeping it up to date, which they won't be able to pay, there will be significant costs of enforcement, rinse and repeat with the problem getting worse and worse till one government or the other wipes the 'debt' and comes up with a better idea.

Tax on fuel the way it is now, means you can't fall out of compliance, therefore no 'fines' and no high cost of enforcement followed by low recovery.

tdgeek is correct that one way you could do that is to tie it to registration and or warrant, however, low income families will lack the resources of one type or another to 'prepare' for the big single cost once or twice a year, meaning they won't go and get a warrant or registration, which causes knock-on effects. Also, it's likely tampering with odometers, which doesn't occur that often now, as there is no incentive for it, will become more common bordering on rampant. Tax needs to be taken at the source for the highest level of compliance.

Diesel and EV's make up a relatively small percentage of total cars, so RUC done the way it is now, works because the low level of non-compliance isn't a significant sum. EV's need to be taxed and should never have been exempt though I understand the rationale behind it. They are heavier than the equivalent ICE vehicle meaning they actually cause more wear and tear on the roads to which they aren't contributing. Having said that, if they left petrol the way it was now, and added RUC to EV's and had it calculated at time of WOF/Annual License Renewal, that would possibly work, as those with EV's aren't as likely to struggle with the higher, less frequent annual or biannual costs. The bottom line is that you are still relying on people, who are inherently unreliable (in the nicest possible way) to undergo a somewhat 'optional' process.

Your highest rates of compliance and lowest cost of enforcement comes from taxing at source.

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#3127167 13-Sep-2023 16:09

This will be kicked down the can some more regardless of who is in power. Maybe when 40% of cars are electric (2035 maybe?) they will be forced into making it easier.
At the very least it will be status quo with Electric cars treated like desiel for a while yet

At the moment I belive the current suggestion for Hybrids is to pay RUC's then keep petrol receipts and claim back on your tax return.
That is crazy.

If it was me I'd tie your RUC payments to your car registration. Get the odo reading at your last WOF and bill you retrospectively for the past year.
At that point you can select to pay monthly/weekly or what ever.

If you sell your car transfer papers include a ODO readiong and you get a bill.

Still going to be a povety trap but less of a trap than many other ways.

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#3127169 13-Sep-2023 16:15

KrazyKid:

Still going to be a povety trap but less of a trap than many other ways.

The poverty trap has a couple of horrible unintended consequences:

Low Income = usually older, less safe, possibly less well maintained vehicle to start with > big bill for RUC > no warrant or registration > fines + no insurance.

End result == far more old cars with no warrant, registration, or insurance and lots of low income people with fines they can't pay, feeling alienated.

This is pretty much the worst-case scenario and pretty much the guaranteed outcome.

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#3127218 13-Sep-2023 16:20

networkn:

If you separate the Tax from the 'Fuel' then expect that there will be those, usually in the lower income brackets, who will treat it as optional or 'pay' later, as it saves them money 'now'.

There will be fines for not keeping it up to date, which they won't be able to pay, there will be significant costs of enforcement, rinse and repeat with the problem getting worse and worse till one government or the other wipes the 'debt' and comes up with a better idea.

Tax on fuel the way it is now, means you can't fall out of compliance, therefore no 'fines' and no high cost of enforcement followed by low recovery.

tdgeek is correct that one way you could do that is to tie it to registration and or warrant, however, low income families will lack the resources of one type or another to 'prepare' for the big single cost once or twice a year, meaning they won't go and get a warrant or registration, which causes knock-on effects. Also, it's likely tampering with odometers, which doesn't occur that often now, as there is no incentive for it, will become more common bordering on rampant. Tax needs to be taken at the source for the highest level of compliance.

Diesel and EV's make up a relatively small percentage of total cars, so RUC done the way it is now, works because the low level of non-compliance isn't a significant sum. EV's need to be taxed and should never have been exempt though I understand the rationale behind it. They are heavier than the equivalent ICE vehicle meaning they actually cause more wear and tear on the roads to which they aren't contributing. Having said that, if they left petrol the way it was now, and added RUC to EV's and had it calculated at time of WOF/Annual License Renewal, that would possibly work, as those with EV's aren't as likely to struggle with the higher, less frequent annual or biannual costs. The bottom line is that you are still relying on people, who are inherently unreliable (in the nicest possible way) to undergo a somewhat 'optional' process.

Your highest rates of compliance and lowest cost of enforcement comes from taxing at source.

There are possibly ways around that such as impounding and selling off cars, and preventing people getting warrants and registrations. There maybe people who won't still pay but they will be breaking the law anyway, and similar to people not paying other taxes.

Yes EVs and hybrids are potentially heavier but IMO that is tiny compared to the damage that these heavier trucks are causing. Also a small hybrid is no heavier than a medium SUV, and both would likely be paying a small vehicle RUC. Plus often they they have wider tyres to distribute that load across a larger surface area. Just carrying 4-5 80-100kg adults can add about the same amount of weight. But Tradies maybe using a ute plus a trailer and may carry tons of load, and I don't think they get charged more.

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#3127222 13-Sep-2023 16:26

frankv:

cruxis:

[Odometer tampering] was a problem way back in 2011. I bet it is worse now with cost of living.

I'll bet it's a lot less now, because it's a *lot* harder to do.

Gone are the days when the odometer drive was a spinning thing off the gearbox that could be disconnected or connected in under a minute (don't ask how I know that). Nowadays it's all electronic, and embedded in the dashboard. There might still be some electrical pulses that go from the gearbox to the dash, which you could tamper with if you knew which wire it was. But maybe it's CANbus messages, so an order of magnitude more difficult to fiddle? If you have stability control, there's a speed measurement on each wheel, and you would be foolish to tamper with any of them. And also, what else is that speed/distance measurement used for? Automatic door locking? ABS? Adaptive cruise control and lane assist? Automatic braking? Gearbox? Engine management? Emissions?

plus with many modern cars, the odo is updated by telemetry to the manufacturer, so this could be used to detect fraud if it suddenly changes.

I wouldn’t be surprised if in the future, the government makes it mandatory for the manufacturers to report the Odo readings so that they can automatically ensure compliance.

They have been successful in getting the Amazons to collect GST for online purchases so why not collect RUC compliance in the same way. I can see a number of countries could be interested in similar information and this thought links in with other discussions I have been following on the poor privacy policies that car manufacturers have.

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#3127224 13-Sep-2023 16:28

smac:

frankv:

But I think it's come out of the embarrassing (but useful) amount of money the government collected when the fuel price went from $2 to $3. Because fuel tax is a percentage of the sale price, a 50% increase in the sale price means a 50% increase in the amount of tax collected. Hence the government could easily give us a 30c reduction in tax per litre, because that much was added on by a 50c/litre price increase. With the $1 increase in price, they were still getting an extra 30c/litre even after that reduction. Of course, if/when the oil price dips the tax take will also dip.

So changing to separate RUC taxes makes budgeting much less dependent on the price of oil.

This is completely false. FED is a fixed amount independent of the fuel price.

I apologise. You're completely correct.

I can't delete the erroneous post. Hopefully a mod will.

mattwnz

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#3127225 13-Sep-2023 16:31

networkn:

KrazyKid:

Still going to be a povety trap but less of a trap than many other ways.

The poverty trap has a couple of horrible unintended consequences:

Low Income = usually older, less safe, possibly less well maintained vehicle to start with > big bill for RUC > no warrant or registration > fines + no insurance.

End result == far more old cars with no warrant, registration, or insurance and lots of low income people with fines they can't pay, feeling alienated.

This is pretty much the worst-case scenario and pretty much the guaranteed outcome.

That was one of the arguments for the clean car discounts so that more EVs would filter down on the second hand car market for lower income people. Although in reality those cars that fall into a 10k market at the moment will be pretty rubbishy EVs with low battery capacity compared to what you can get with petrol vehicles . But the CCR still penalised low income people because even a new petrol only vehicle that is cheaper than EVs or hybrids often has to pay the CCR tax, which then often goes to rich EV buyers..

I think that people do forget that driving is not a right, it is a privilege. But the big problem NZ has is that it lacks good public transport in most areas so there isn't an alternative. Maybe it is also about getting less people off the roads and onto cycleways as it was Nationals idea to build the national cycleways.

But the fact is that there isn't any other way to tax EVs apart form RUCs, and eventually most cars will be EVs, although this could take decades. I guess one way would be for car manufacturers being required to build the car into a subscription service and they collect the RUCs and pay the government. Then the car is not operational without an active subscription. Technology could allow this to occur, but people would then start hacking these systems, and people may drive older cars for longer.

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#3127226 13-Sep-2023 16:34

A lot of good ideas and points here

Digesting those, especially the pitfalls, here is my take, v3.0

Leave petrol cars as they are. As stated, automatic compliance, nothing further to do

EV's join diesel, that system is already there. No affordability issues

Hybrids.

If they are often using all or mainly the battery on urban driving, they can join EV/diesel and pay RUC on mileage. Excise on petrol "should" be minimal
They can claim back fuel excise, which is already in place. (I am unsure how fiddly that is, someone else here will know)

At least all the above are current processes, so theoretically "easy" to implement

mattwnz

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#3127230 13-Sep-2023 16:42

tdgeek:

A lot of good ideas and points here

Digesting those, especially the pitfalls, here is my take, v3.0

Leave petrol cars as they are. As stated, automatic compliance, nothing further to do

EV's join diesel, that system is already there. No affordability issues

Hybrids.

If they are often using all or mainly the battery on urban driving, they can join EV/diesel and pay RUC on mileage. Excise on petrol "should" be minimal
They can claim back fuel excise, which is already in place. (I am unsure how fiddly that is, someone else here will know)

At least all the above are current processes, so theoretically "easy" to implement

Most hybrids can't be driven on EV mode (or only at very low speeds for less than a km), the engine decides when the petrol or electric gets used. So it is basically just a more efficient petrol engine and can save about 20-30% of fuel and emissions. So it isn't much different to either driving a smaller car and / or driving far more conservatively and on flat roads without extra loads in the car to reduce fuel usage. Plugin hybrids potentially may never need any petrol if it is only ever driving short distances. so they would need to be managed more like EVs IMO. But they aren't very poplar and only a very small number on the road and they seem to be more of a transition technology, as the future is EV.

mattwnz

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#3127231 13-Sep-2023 16:44

frankv:

smac:

This is completely false. FED is a fixed amount independent of the fuel price.

I apologise. You're completely correct.

I can't delete the erroneous post. Hopefully a mod will.

Although they do collect more GST when fuel prices rise, which is also essentially a tax on a tax. I don't think that would occur with RUCs, so guessing teh GST take would also be lower.

But I do think that this is an opportunity for the government to do a reset on road tax, as switching to RUCs then has a new baseline and makes it very difficult for people to compare whether they are spending more or less when they drive their car.

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#3127237 13-Sep-2023 16:58

mattwnz:

Most hybrids can't be driven on EV mode (or only at very low speeds for less than a km), the engine decides when the petrol or electric gets used. So it is basically just a more efficient petrol engine and can save about 20-30% of fuel and emissions. So it isn't much different to either driving a smaller car and / or driving far more conservatively and on flat roads without extra loads in the car to reduce fuel usage. Plugin hybrids potentially may never need any petrol if it is only ever driving short distances. so they would need to be managed more like EVs IMO. But they aren't very poplar and only a very small number on the road and they seem to be more of a transition technology, as the future is EV.

I read the other day that hybrids are very popular, but you're saying that plugins arent? Its mainly non plugins?

https://evdb.nz/ev-stats

It doesnt show non plug ins, but it infers to me that they are lower than plugins. I would have thought non plugs ins are more transitional as they are cheaper, while PHEV's cater for range anxiety but you get good use of the EV side, so yes also transitional but also are essentially full EV's in an urban setting

networkn

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#3127238 13-Sep-2023 17:00

mattwnz:

There are possibly ways around that such as impounding and selling off cars, and preventing people getting warrants and registrations. There maybe people who won't still pay but they will be breaking the law anyway, and similar to people not paying other taxes.

Yes EVs and hybrids are potentially heavier but IMO that is tiny compared to the damage that these heavier trucks are causing. Also a small hybrid is no heavier than a medium SUV, and both would likely be paying a small vehicle RUC. Plus often they they have wider tyres to distribute that load across a larger surface area. Just carrying 4-5 80-100kg adults can add about the same amount of weight. But Tradies maybe using a ute plus a trailer and may carry tons of load, and I don't think they get charged more.

There is no practical way around heavy trucks unless everyone stops ordering their iPhones and big screen TV's which I don't see happening any time soon. They are a necessary part of life. EV's are new and around 25% heavier. There are also a lot more cars than trucks, so the impact is going to be more than currently.

Impounding and selling cars is expensive (it's enforcement). It means people can't get to work, doctors, schools etc. Those are the people who are more likely to need those things. I can't overstate the harm punitive actions like this have on low-income families.

We are setting people up to fail to not tax little and often at the source (as it is now).

It's irrefutable and irresponsible.

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#3127240 13-Sep-2023 17:02

tdgeek:

Hybrids.

If they are often using all or mainly the battery on urban driving, they can join EV/diesel and pay RUC on mileage. Excise on petrol "should" be minimal
They can claim back fuel excise, which is already in place. (I am unsure how fiddly that is, someone else here will know)

At least all the above are current processes, so theoretically "easy" to implement

How would you figure out if a plugin hybrid is matching point 1?

I would think you would expect all plugin hybrids to be paying RUC and then possibly claiming back any petrol used (if RUC stays on petrol). Which seems icky to me. If you don't add RUC for plugin hybrids and call thenm petrol cars, then that leaves a big hole in the system for anyone that are able to run those mostly on electricity.

The suggested RUC on all cars (National and possibly one of the recommendations from Waka Kotahi) would mean that cars that use a lot of petrol probably will get off cheaper than today. A possible fix for that would be to add a CO2 fee to petrol as well as RUC per km for petrol cars.

But almost no matter how you slice it, there is a high chance of introducing a system that is skewed one way or another.

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jarledb

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#3127241 13-Sep-2023 17:03

networkn:

They are a necessary part of life. EV's are new and around 25% heavier.

Do you have a source for that claim?

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