Fee increases for road user charges and fuel excise duty - 1 October 2010
Last updated on
12/01/2012 4:34 p.m.
Road user charges (RUC) and fuel excise duty on petrol (FED) increased on 1 October 2010, as scheduled. This page contains questions and answers on these changes.
As of 1 October 2010:
- FED increased by 3 cents per litre
- RUC increased by 7 percent on average, though increases vary according to the type and weight of a vehicle
Read the Minister of Transport’s full media release on the Beehive website
New RUC rates on the NZ Transport Agency website
Read some commonly asked questions and answers about RUC and FED below.
Questions and answers - RUC and FED fee increases
Why does there need to be an increase in charges?
In March 2009 the government announced it would not proceed with regional fuel taxes and would instead make smaller increases to fuel excise duty and road user charges to make more funding available for roading projects across the country.
The increase on 1 October 2010 is the second of two scheduled increases of three cents per litre which include an annual increase of 1.5 cents per cents scheduled by the previous government. The first increase took effect on 1 October 2009.
When will the increases take effect?
1 October 2010.
How much is FED being increased?
Fuel excise duty for petrol is being increased by three cents per litre. The current rate of FED is 45.524 cents per litre. From 1 October 2010 the new rate will be 48.524 cents per litre.
Does the FED increase apply to CNG and LPG?
No. The increase only applies to fuel containing motor spirit with a research octane number less than 95 (regular grade) and motor spirit with a research octane number 95 or greater (premium grade).
What are the actual RUC increases?
The overall average increase in RUC is seven percent, about the same as the percentage increase in petrol excise duty that is being implemented at the same time. The exact increases to RUC will vary for different vehicle types according to their size, weight and axle configuration.
For most vehicles weighing less than ten tonnes gross, RUC increases will be 9–10 percent, with lower rates of increase for higher weights.
For a two tonne (small) diesel car, the increase in RUC adds an extra $37.50 to the cost of driving 10,000 kilometres, or 0.37 cents more per kilometre.
For a larger vehicle such as a three tonne SUV the RUC increase will add an extra $41.10 to the cost of driving 10,000 kilometre or 0.41 cents per kilometre.
As GST is increasing at the same time as RUC, the total increase in cost will be slightly higher.
A full list of the new rates is available on the NZ Transport Agency website, or ring the help-desk at the RUC Contact Centre on 0800 655 644 Monday to Friday 8am to 6pm.
What will this increase mean for owners of diesel vehicles?
All RUC rates will increase. The exact increase to RUC depends on the weight and axle configuration of your vehicle. A full list of the new rates is available on the NZ Transport Agency website or ring the help-desk at the RUC Contact Centre on 0800 655 644 Monday to Friday 8am to 6pm.
What will this mean for operators of heavy vehicles?
RUC represents about ten percent of the total costs for road transport operators (the largest costs are wages and depreciation).
The 1 October RUC increases will add about five to six percent to the RUC payable for combination vehicles running at maximum weights – this represents an increase of 0.5 to 0.6 percent to total operating costs.
For some operators RUC will be a higher proportion of costs, or their vehicle fleet will have higher average increases in rates. For them the increase will have a slightly larger impact, but this is still unlikely to be much more than one percent of total operating costs.
What will this mean for owners of light diesel vehicles (cars, vans and SUVs?)
The increase in RUC for two and three tonne light vehicles will be $37.50 and $41.10 per 10,000 kilometres, respectively – ie about 0.4 cents per kilometre. (This is in comparison with the old RUC rate applying the new level of GST).
Total light vehicle running costs range between 50 cents and one dollar per kilometre travelled, depending on the type of vehicle. The RUC increase will therefore add between 0.4 percent and 0.8 percent to the running costs of a light diesel vehicle.
What happens to existing RUC licences when charges increase on 1 October?
RUC licences for heavy vehicles will expire one month after the date of the increase. RUC licences for light vehicles (3.5 tonnes and under) will not expire.
Will heavy vehicle operators lose money when their licences expire?
No. Heavy vehicle operators will receive an automatic refund in the form of a credit on any unused portion of the RUC licence when they purchase their new licence.
How can I be sure this increase in RUC is fair?
The average increase in RUC of seven percent is about the same as the increase in petrol excise duty.
The variation in increases for different weights and types of vehicles is due to differences in the amounts of costs attributed to different types of vehicle by the Ministry of Transport’s cost allocation model. The RUC increases are substantially lower than those indicated by the cost allocation model.
Some diesel users will pay more, and some less, in RUC, than equivalent petrol vehicles pay in fuel excise duty. This is the result of having two charging systems, one based on distance travelled and the other on fuel consumed.
What is the cost allocation model?
The cost allocation model (CAM) is a mechanism designed to share the costs incurred under the National Land Transport Programme in a given year between vehicles of different types, according to the differences in the costs they generate for the road network. It calculates RUC and FED rates that would recover those costs.
The CAM is currently under review and the results of that review may lead to changes in the distribution of costs between different classes of vehicle in the future. Any such changes will be given effect gradually.
The review is unlikely to lead to reduction in RUC rates for any vehicles, bearing in mind that current RUC are significantly below the levels indicated by the existing CAM.
How will RUC licence holders know when charges have increased?
As a result of an amendment to the Road User Charges Act 1977, the government is required to give six weeks notice of increases to RUC. Notification will be in the Gazette.
How does biodiesel work within this system?
Biodiesel is currently blended with regular diesel. There is no roading tax on diesel or biodiesel as these costs are met through RUC. This will continue under the changes.