Government will have to 'get smart' to avoid fuel tax loss as New Zealanders switch to EVs - expert

An expert says the Government is going to have to "get smart" to ensure the $4 billion it collects from fuel taxes doesn't disappear as more people make the switch to electric vehicles (EVs). 

The Government announced its Clean Car Package on Sunday morning to drive down New Zealand's emissions. The package includes a discount on electric, hybrid and low-emission vehicles, funded from a fee on higher-emitting ones.

Professor of energy economics at Auckland University Basil Sharp tells The Project it's a "good move" if New Zealand "is serious about meeting its international commitments". 

However, he says governments will have to get innovative when it comes to retaining the money petrol and diesel earns for road upkeep. 

Annually, tax on petrol, diesel and other road user charges make about $4 billion for the Government. This revenue goes towards road maintenance and other transport projects. 

Electric vehicle owners dodge this tax as they do not need to buy petrol. 

"When you think about it, EVs are actually free-riding on the petrol taxes that internal combustion engine drivers are paying now," Prof Sharp says. 

"So governments are going to have to get smart."

Prof Sharp says a system that logs the roads an EV uses and charges drivers would be able to combat this.

He says there's "no reason why you can't have camera readers on the entries to our infrastructure that can pick up an EV and charge it".