Feature article
What you need to know about the changes to Road User Charges (RUC)
Changes to NZ's Road User Charges (RUC) are coming. Petrol tax is out, electronic RUC is in. How will it affect you?
What you need to know about the changes to Road User Charges (RUC)
The Government recently announced it is working towards transitioning all of New Zealand’s light vehicles to electronic road user charges in order to pay for the road network. This will replace the petrol tax you pay at the pump.
Currently, New Zealanders pay Fuel Excise Duty (FED, or petrol tax) of about 70c per litre of petrol at the pump when filling a petrol car.
However, diesel, electric and heavy vehicles pay Road User Charges (RUC) based on distance travelled. And so the plan is to have all light vehicles moving to RUCs.
Why? Primarily because the fuel efficiency of petrol-powered vehicles, many of which are now hybrids, has improved to the point where the excise duty on fuel isn’t providing enough revenue to fund the system.
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Hang on, what are Road User Charges?
Read our explainer - What are RUCs?
The revenue goes into the National Land Transport Fund which helps pay for the building of new roads and the maintenance of existing ones. The Government wants all vehicles to pay based on actual road use regardless of fuel type.
The Transport Minister, Chris Bishop says; “The abolition of petrol tax, and the move towards all vehicles (whether they be petrol, diesel, electric or hybrid) paying for roads based on distance and weight, is the biggest change to how we fund our roading network in 50 years.”
Summary of the changes
- All owners of light vehicles (under 3500kg) will move to a Road User Charges system eventually.
Fuel tax will no longer be collected from fuel sales.
The Government will enable the use of a range of electronic RUC devices to track distance travelled and enable digital payments.
This will in time allow for the bundling of other road charges like tolls and time of use based pricing into a single payment.
What does this mean for the petrol tax?
It will be removed and replaced by road user charges for all vehicles.
What does this mean for petrol prices?
The price of petrol will decrease at the pump, by around about 70 cents per litre.
What does it mean for your wallet?
While it will be cheaper to visit the gas station, motorists will likely end up paying more in road user charges. The system is being changed as there is less fuel duty being taken at the pump due to there being more fuel efficient cars on the road.
According to the Minister; “For decades, petrol tax has acted as a rough proxy for road use, but the relationship between petrol consumption and road usage is fast breaking down. For example, petrol vehicles with better fuel economy contribute less FED per kilometre towards road maintenance, operations, and improvements.
“As our vehicle fleet changes, so too must the way we fund our roads. It isn’t fair to have Kiwis who drive less and who can’t afford a fuel-efficient car paying more than people who can afford one and drive more often.”
When will this happen?
The Government has not yet set a date for this, which it says is a ‘deliberate choice’, as it focuses on ‘getting the system right rather than rushing its rollout’.
The Government expects to pass legislation in 2026, followed by an updated Code of Practice for RUC providers. During that time, the Government will ‘engage with the market to assess technological solutions and delivery timelines’.
It’s expected that by 2027, the new digital RUC system will be online using private sector third-party providers.
Author
Kyle has been reviewing cars since starting at NZ Autocar magazine in 2003 and has been editor since 2009. In that time he’s become an expert on what makes for a good vehicle while also gaining insights into the local automotive industry.
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