Cost of living: Transporting NZ calling for fuel tax cut to remain so Kiwis can have 'certainty'

A transport expert is calling for the Government to keep the fuel excise tax off as the cost of living crisis continues to bite. 

Back in March, the Government revealed it was slashing fuel excise tax by 25 cents per litre and halving the cost of public transport for an initial three-month period to help Kiwis struggling with the increasing cost of living. Then, in July, Finance Minister Grant Robertson extended the scheme until the end of January. 

The tax cut was announced after the Government faced increasing pressure over high inflation and the price of petrol skyrocketing above $3 a litre, largely driven by the war in Ukraine. The tax cut was expected to save Kiwis $11 to $17 per average fill-up, depending on the vehicle.

The fuel tax cut is due to end in January, but no decision has been made yet on whether it could be extended, which has transport operators worried.

Transporting NZ chief executive Nick Leggett told AM on Thursday Kiwis deserve certainty about what the Government is going to do with the tax.

"The transport industry, which of course runs diesel trucks, has had a discount on road user charges and of course, there is that public transport discount as well," Leggett told AM co-host Melissa Chan-Green. 

"Now, that package is expensive, but our view is inflation is still going to be high early next year and until such time as households get a reduction in their cost of living costs, the Government should keep this package in place." 

If the tax is reintroduced next year, Leggett said Kiwis will see prices rise in their everyday items, not just fuel. 

"You don't have to be an economist to work out if trucks carry 93 percent of New Zealand's freight, that when you increase overnight the cost of running a truck, everything goes up that a truck carries," he said. 

"That's an increase in groceries, that's an increase in everything that trucks do for us. Not only are consumer's going to be hit there, they're going to be hit when they fill up their car on the 1st of February because fuel will go up overnight by $0.25 a litre. This is real and I think people deserve certainty." 

Leggett said the tax is a "tangible" way the Government can help Kiwis as the cost of living continues to hit New Zealanders hard in the back pocket. 

"I think we know we live in a very volatile world and it's not just energy prices, it's the price of everything that this gives some easing too," he said.

"We know inflation is not going to be significantly lower early next year. We know food prices have gone through the roof in the last few months and people deserve some kind of easing … this is a really real, tangible easing that they can give families and households and businesses."

Transporting NZ CEO Nick Leggett.
Transporting NZ CEO Nick Leggett. Photo credit: AM

The tax is estimated to cost the Government close to $100m a month, and Leggett believes this is the best way the Government can help Kiwis. 

"This is something that in your everyday budget, you will feel and you take that off on the 31st of January, as the Government is proposing and I think that Kiwis are going to get a rude shock and frankly people will need to start budgeting now," Leggett told AM. 

"So let's have certainty for the new year, have certainty that the Government is actually on the side of those people that are struggling and keep this going and keep that direct support up." 

A litre of 91 petrol in New Zealand currently costs on average around $2.38 a litre, meaning when the tax is reintroduced many Kiwis can expect to pay closer to $2.70 a litre for fuel.  

Transport Minister Michael Wood previously told AM in September the tax would be reintroduced at the start of next year.

"We've always said we wouldn't be able to extend it forever and a day so that will come to a conclusion in January but there are other supports that will continue for New Zealanders facing these pressures," Wood said. 

But Prime Minister Jacinda Ardern has held off on any commitments around the fuel excise tax. 

Asked last week if the Government would extend it, Ardern said they would "make those decisions closer to the time".

Watch the full interview with Nick Leggett above.