New Zealand announces road-user tax for electric vehicles

Increasing numbers of electric and plug-in hybrid vehicles on New Zealand roads means there’s less money for infrastructure projects from the country’s petrol tax – but that’s all about to change.

Electric-vehicle owners in New Zealand will soon have to pay a road-user tax, based on the distance they travel.

From 31 March 2024, any electric car and plug-in hybrid vehicle (PHEV) weighing less than 3500kg will be required to pay the new tax, in an effort to recoup revenue lost from the petrol excise, the New Zealand Government said.

It is expected electrified cars will fall under the same road-user charge applied to diesel vehicles in the country, taxed at a rate of $NZ0.076 per kilometre ($AU0.073/km).

Electric passenger cars made up 14 per cent of new vehicles sold in New Zealand in July 2023, due to the country’s sliding-scale rebate – which charges high-polluting vehicles such as utes, SUVs, and four-wheel-drives higher sales taxes, which are passed on as rebates for buyers of PHEVs and electric cars.

The increased number of electrified vehicles has meant reduced revenue for the National Land Transport Fund, which pays for road upgrades and maintenance.

It’s understood the road-user charge will come into effect no matter which political party is voted in at the New Zealand general election being held next month.

MORE: Australian policymakers rule out New Zealand's radical electric-car plan

Traditional hybrid and mild-hybrid vehicles – as well as electrified vehicles weighing more than 3500kg – will remain exempt from the road-user tax until 2026.

However, government officials have admitted all vehicles will eventually be required to pay the distance-based charge.

The government has also committed to increasing the petrol excise by 12 NZ cents over the next three years, from its current rate of around 70 NZ cents per litre.

It’s expected these changes will contribute to a $NZ5 billion ($AU4.6 billion) boost to the transport fund – an increase of approximately 25 per cent.

In Australia, the Victorian Government’s road-user charge for electric and plug-in hybrid vehicles is currently being challenged by the Federal Government, despite backing from all local states and territories – some of which have announced their own distance-based tax.

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