Fueling Change: The Debate Surrounding Auckland’s Removal of Fuel Tax

Octo Group Fuel Tax

In recent years, the issue of fuel tax has sparked significant debate in Auckland, New Zealand. With rising concerns about the cost of living and the impact of taxes on everyday expenses, the topic has become a focal point for residents and policymakers alike. Now, as discussions intensify, the possibility of removing fuel tax altogether is generating both support and skepticism within the community.

Fuel tax, implemented to fund infrastructure projects and promote environmental initiatives, has long been a contentious issue. Proponents argue that it is necessary to maintain and improve vital transportation networks while encouraging sustainable practices. However, opponents contend that the burden falls disproportionately on lower-income households and businesses, exacerbating financial strain and hindering economic growth.

Transport Minister Simeon Brown has confirmed that the Auckland Regional Fuel Tax will end on 30 June 2024. “Today, I can confirm that the Government has agreed to remove the Auckland Regional Fuel Tax in line with our coalition commitments, and legislation will be introduced to parliament to repeal the tax as part of our 100 Day Plan,” Mr Brown says.

Since 1 July 2018, Aucklanders have faced an additional 11.5 cents per litre tax on fuel, over and above what the rest of the country pays, increasing the cost of living at a time when they can least afford it. Ending this tax is one way to reduce the price of fuel and ease some of the financial pressure facing households in our largest city.

“Removing this extra tax of 11.5 cents per litre on petrol and diesel means the driver of a Toyota Hilux will save around $9.20 every time they fill up, while a Toyota Corolla driver will save around $5.75.

“Fuel tax is becoming an increasingly regressive form of taxation and costs people on lower incomes with less fuel-efficient vehicles more than those who have newer more fuel-efficient vehicles. We intend to fully remove the legislative framework for regional fuel taxes.”

As of September 2023, around $780 million in Regional Fuel Tax (RFT) revenue had been raised, with approximately $341 million remaining unspent (the equivalent of more than two years’ worth of revenue).

“The RFT was supposed to help fund important projects like Mill Road and Penlink. While Mill Road was cancelled, and Penlink received full Crown funding, Auckland Transport has used RFT revenue to fund many non-roading projects including more cycle lanes, redlight cameras, speed humps, and lowering speed limits across the city,” Mr Brown says.

Fuel tax has been a major cost for Octo Group and will be a welcomed relief in overheads which we can pass down to our customers.

Amidst these divergent perspectives, policymakers face the challenging task of balancing fiscal responsibility with the needs and preferences of the community. Finding a solution that addresses both concerns about affordability and the imperative of infrastructure investment remains a formidable challenge.

Legislation removing the RFT will require Auckland Transport to only be able to use the remaining RFT revenue and unspent funds towards delivering these projects.

Ultimately, the decision to remove fuel tax in Auckland will have far-reaching implications for residents, businesses, and the overall economy. While the prospect of lower fuel prices may be enticing for many, it is crucial to carefully weigh the potential trade-offs and ensure that any policy changes align with the broader goals of sustainability, equity, and economic prosperity. Only through collaborative efforts and informed decision-making can Auckland navigate the complexities of fuel taxation and chart a course toward a more prosperous and resilient future.