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2041 posts

Uber Geek

# 215477 29-Jun-2017 10:39
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Slightly provocative topic heading perhaps, but I’ve been wondering how road building and maintenance will be funded as electric vehicles become more pervasive.  There must come a time in the not too distant feature when there is not enough petrol being bought and taxes gathered from that becomes insufficient.




Thoughts and ideas?  Road User Charges?  Rego fees?

"I have noticed even people who claim everything is predestined, and that we can do nothing to change it, look before they cross the road." -  Stephen Hawking

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646 posts

Ultimate Geek

  # 1809929 1-Jul-2017 00:08
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When will they start charging RUC for electric cars?



Short answer:


When EV's make up 2% of the Light vehicle fleet.




Long answer.


RUC's are payable on all cars where unless their fuel is taxed at source (Only Petrol and LPG are, so every other fuel source needs RUC's). Electric cars have been granted a temporary exemption to encourage uptake.

I think this is quite justified given the benefits to the country of electric cars. (i.e. local air quality, assisting with meeting paris agreement targets, using NZ generated electricity rather than sending our wealth to oil producing nations). Also it avoids issues of double taxation on plug in hybrids. Prior to the exemption (if any such cars were on the market), plug in hybrids owners would have had to pay both RUC's and Petrol tax when running on petrol.

The current exemption expires on the 31 December 2021. And is part of the following:



The Government’s package includes:


  • A target of doubling the number of electric vehicles in New Zealand every year to reach approximately 64,000 by 2021
  • Extending the Road User Charges exemption on light electric vehicles until they make up two percent of the light vehicle fleet
  • A new Road User Charges exemption for heavy electric vehicles until they make up two percent of the heavy vehicle fleet


It is great that the government has given relative certainty of its stance on this for the next few years, so people can make informed financial decisions




While there are relatively low numbers of electric cars on the road, the lost income tax income is minor. I think the idea is to promote electric vehicles (EV's) now, allowing infrastructure to be built, and getting the public use to the idea of electric cars. Once the ball has got rolling, the tax exemption will be withdrawn, and electric vehicles will need to stand on their own merits.


By international (first world) standards, our electric vehicle incentives are considered very low. Note that countries like the USA, UK, Japan and much of europe have subsidies towards the purchase of electric vehicles in the area of NZD 10,000. Obviously our government assistance pale in comparison, and as such our electric vehicle uptake is much lower than these countries. Most of our EV's are used imports from countries with subsidies


Regarding RUC's, these need to be reconsidered prior to reintroduction on electric cars. Current policy strongly favors Petrol as a fuel for small/economical vehicles, and Diesel for large vans, utes etc. If current RUC policy remains, the likes of the toyota prius would pay far less road tax than a Nissan Leaf, the opposite of what we want to incentivise. Also we would need to resolve the plug in hybrid double taxation issue.


Regarding electricity supply, this isn't much of an issue. EV growth is predicted to be so slow that it is unlikely to have a rapid impact. Lines companies build cost of upgrades into their pricing structure, so this will be paid for as per normal. If anything EV's could be increase utilisation factor on local lines by shifting power use to the cheaper off peak window. Regarding fast charging installations, these would be charged lines fee's just like a small factory or something with similar electrical demand. These fees (as per in industrial settings) are set to cover the cost of providing the capacity to that location.









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