A political party has proposed RUC's to be applied to all vehicles, instead of the current system where Petrol, LPG & CNG light vehicles's pay in their fuel (and EV's are exempt).

I want to keep this discussion about policy, not politics, so please ignore who made the proposal.

I am aware that this has been discussed in both the Nissan Leaf & EV thread, but given this in addition to EV's, this will impact the other 98% of light vehicles on our road (admittedly to a lesser extent for Diesel & Hydrogen vehicles that already pay RUC's), I felt it appropriate to create a new thread.

 

 

Road user charges will soon apply to all vehicles, including electric vehicles, according to a new plan by the National Party, provided they win the next election.

 

The party’s transport spokesperson Simeon Brown said as New Zealand moves towards electric vehicles, there needs to be a way to maintain the sustainability of the National Land Transport Fund.

 

“It will be a much fairer way of charging for the number of kilometres people drive rather than the amount of fuel they use,” he told the Herald this afternoon.

For those unfamiliar with Road User Charges (RUC's):

• All road vehicles over 3500kg GVM (trucks etc), and those under which use a fuel not taxed at source like diesel (and not temporary exempt like EV's) need to pay RUC's
• You pay online or at a physical location and get a label to display in your windscreen that shows the max Odometer reading (Hubometer for trucks).
• If you don't keep current with RUC's, you are required to catch up, and can get a substantial fine.
• RUC rates vairy by weight, but currently are $76/1000km for diesel cars. Rates here
  https://www.nzta.govt.nz/vehicles/road-user-charges/ruc-rates-and-transaction-fees/
• Note that rates are already banded by weight. Light vehicles do near negligible damage to the roads (note how the rate is hardly any more in the 3501kg -6000kg band), so RUC's for light vehicles are largely paying for space on the roads, rather than damage. as such, a VW Amarok diesel pays the same as a VW polo diesel.
• Commercial off road users of petrol & anybody who uses petrol in a RUC liable vehicle (i.e. USA sourced petrol powered large RV) can claim back petrol tax. (no refunds for recreational off road users)

Strengths of the policy

• Objectively much fairer than the status quo.

   

  • Currently efficient petrol car's get an incredible deal (which essentially priced small efficient diesel off the roads in NZ, would hate to see the same happen to EV's).
  • Currently petrol vehicles in applications that would consume a lot of fuel (Larger van's, heavy towing etc), get a poor deal (hence why most of these vehicles are diesel).
  • removes unfairness of people having to pay road tax on petrol used in (non commerical) lawnmower, chainsaws, generators, boats, planes etc.
• Removes market distortions from taxing one fuel per liter, and another per km. (i.e. market is distorted towards petrol for small car's, and towards diesel for utes, vans & larger off road style SUV's).
• Removes the paperwork of claiming back petrol tax for those eligible to (i.e. commercial petrol powered boats).
• Avoids the issue of declining tax take as the (non plug in) fleet gets more efficient. i.e. when somebody replaces a old v6 highlander doing 12L/100km with a highlander hybrid doing 6L/100km, government tax take will half.
• Avoids the regressive taxation issue where those who can only afford an old inefficient vehicle (think a minivan doing 14L/100km), end up paying way more to use the roads than somebody who can afford a modern, efficient equivalent

Weaknesses of the policy

• Breaks the unintended buy nice incentive / market distortion in favor of more efficient petrol car's
• Politically risky:

   

  • Removing the likes of recreational boating from the tax pool will mean this tax will need to be made up by road vehicles, meaning for the same tax take, on average road vehicle users will need to pay more then they do now)
  • Those who benefit (Recreational boaties, drivers of petrol large SUV's, Petrol Utes, Petrol Vans & Petrol Performance car's) will likely keep quiet, while those disadvantaged will scream murder.
  • Media will latch onto stuff like ranger raptors (petrol v6 twin turbo, cranking out 292g co2/km), getting a massive effective tax cut, while tiny hatchback drivers get a massive hike.
  • Taxi industry is going to scream blue murder as their running costs spike (they mostly run petrol hybrids).
• Another thing for petrol car users to keep track of.
• Creates a lot of paperwork - Hopefully they go fully digital, and don't need to print millions more windscreen cards.
• More fraud prone than petrol tax. (Fairly easy to get tools that change your odometer on many cars), but this issue is hardly new, has existed with diesel cars for decades.
• Could create a poverty trap. Generally those with limited financial means end up driving petrol car's, as they are cheaper to buy than than diesel or EV's. Having road tax bundled with petrol makes a nice pre-pay system. Can't get behind, and easily can fill in small increments (say add $40 of petrol). In comparison RUC's:
  

   

  • You can easily go into RUC debt / arrears if you don't keep up.
  • Have to be purchased in 1000km blocks ($76 at current rates), which could be too lumpy for somebody who only has $40 for car running that week.
  • Has admin fees ($4.80 online, $7.80 counter sales), so quite an extra cost if one only buys 1000km blocks.
  • Adds risk of being fined (I think it is $400), if one gets caught in RUC arrears.
• Potentially a difficult transition. Are they simply going to get everybody to declare their current ODO, or will they wait to their next WOF, potentially forging a year of revenue?
• Per km charging is still a pritty bad way to charge for space on the roads. a trip across Auckland is far more expensive to provision for at 7am on a tuesday, than at 3am... Full dynamic congestion charging would be more economically efficient.

Key questions I have about the policy:

• How broad is "All vehicles"?

   

  • Will it cover light trailers? (assume no)
  • Motorbikes / 50cc style scooters? (Assume yes)
  • E-Bikes / E-scooters? (assume no)
  • Push  bikes (assume no)
• How exactly will it be phased in? will everybody need to declare their Odometer on a set date?
• Will RUC's for petrol vehicles and EV's be phased in at the same time. The stuff article implies not, which would be an issue in the intermediate period. I.e. if a MG4 has to pay 3x the road tax of a yaris hybrid we are going to see EV uptake stall.