Diesel Tax to be Scrapped

April 22, 2009 New Zealand FinanceNew Zealand Taxation  No comments

Indications have it that the road user charges which act as a tax on diesel fuel could soon be scrapped.

Transport Minister Steven Joyce is expected to release a review over the next few weeks, in May, assessing the viability of replacing Road User Charges (RUC) currently levied on diesel users, with a system more akin to the current tax per liter of petrol.

The report on which Steven Joyce is commenting was submitted to him earlier, which was initially started by request of the previous government’s Transport Minister, Annette King.

From initial statements by the government, there are already indicators that this decision will go ahead. It is claimed that from the $900 million generated by the RUCs, $120 million is spent on administration and follow up. Direct taxes are believed to be able to reduce this. Further, it is claimed that a direct tax will lower administration and overhead costs for heavy trucks.

Currently the Automobile Association of New Zealand and Business New Zealand support the change.