Been saying this for a long time, it is a much fairer system than the current one. One of the few NAFf policies that I fully agree with.
this post was submitted on 29 Aug 2024
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If heavy road freight paid RUCs more in line with the damage they do to the roads, then sure, but given their lobby paid for the National government that's not going to happen.
For people living paycheck to paycheck RUCs are a bill shock proposition so will mean many of them fall behind and inevitably start getting fined and dragged into the court system. The huge advantage of fuel tax is that its easier to administer, easier to enforce and far easier to pay as its just as you go.
100% on trucks paying for the damage they actually do.
But as you say, probably not going to happen.
But as cars have become more efficient, the number has been growing at a much higher rate than the tax take. Something has to be done about this situation, as it is not sustainable long term.
True, fuel efficiency meaning less petrol consumed & lower tax take is an aspect i'd not considered. Has that trend continued since the EV subsidy was canned? I'd expect the uptake of EVs was counterbalancing the fuel inefficiency of the ever larger Ute, and without a subsidy the EV sales dropped.
In any case, part of the massively increased cost in road construction is due to having to build roads that can safely take the weight of the trucks getting larger since the National legislation changes in 2014; those heavier trucks travelling faster is also part of the reason why there are more pot holes. Yet the operators that have gotten extremely wealthy have never had to pay their way to use the roads. Unlike the various rail / coastal shipping operators who could transport far more freight far more efficiently (if less time flexibly).
Utes and any diesel powered vehicle, already pay road user charges.
The fleet has been getting more efficient over time, this is expected.
As a side note, the damage that a vehicle does to the road rises at the 4th power of weight.
So a vehicle that is double the weight does 16 times the damage. Using a 1200kg car as the baseline with a damage factor of 1, a 50T truck will produce a damage of ~335,000 (assume that the weight is evenly distributed across the 9 axles)
Oh yeah duh, probably aren't any modern Utes that are petrol nowadays - though i'd guess some medium-large SUVs probably still are.
The damage thing is mad huh - which is why the way RUCs are charged on heavy freight is (last time I looked anyway) such a heavy subsidy to that industry.
RUC is weight based. If the weight is an issue, shouldn't the government just increase the cost of RUC in the higher bands?
Here's the thing. Freight transport is obviously important to the country's economic activity, so i'm actually OK with some form of public funding for road freight.
But I also think the heaviest freight would be better off the roads altogether and that in an ideal world long distance freight would also not be transported the length of the country. This could make roads safer, cheaper to build and reduce emissions by using more efficient vehicles.
Now, that implies that yes, low RUCs on heavy trucks is a problem, but its a multi-faceted one and the problem is that our current government's transport strategy just roads roads roads.
Isn't you and I driving also important to the country's economic activity? I drive to work, I drive to the stores. I drive to the gym and recreational activities. That's all economic activity.
If the government wants to go the open market route, shouldn't they increase RUC on heavy vehicles, making it user pays? Then alternatives to road freight become more cost effective.
There's two ways to achieve it; re-introduce the legislation (I think) from prior to the 80s that limited the maximum distance freight could be transported on road. If I recall some documentaries i've watched correctly it was removing this restriction that made road transport competitive with rail in the first place and precipitated the decline of TranzRail.
Or, as you say, charge all forms of transport the full cost of provisioning it which would immediately make road transport very expensive. The problem is that would probably cause an immediate inflation bump as a mode change like that really needs careful panning and transition.
I feel like I heard of a Labour plan to build rail hubs. Infrastructure like that is expensive and risky for private companies (because what if there are no customers?), but if the government set it up (say, one near Auckland and one near Wellington), and organised the rail freight between, you could have a really nice rail system set up, with trucks handling just the first and last stretch.
Yeah, and if well designed it potentially is an investment like electrifying steel furnaces. Anything we do that has a big impact on reducing emissions is likely a good thing.
Maybe we could get the main line from Auckland to Wellington electrified for heavy freight? Ok now I'm just drreaming.
If it follows SH1 (mostly) that would be a great thing.
I would love to be able to have passenger terminals available to travel to Wellington / Auckland
I was thinking freight hubs installed on the existing train line.
Wellington/Auckland passenger rail is already available, but it's marketed to tourists and has a price to match, at $250 per person one way. You'll find flights for half that.
Fuel has got a lot more expensive around the same rate that cars have gotten more efficient, so it kinda cancelled out since the tax is a % of the price... They could also just adjust the tax...
Given an ever increasing amount of vehicles are either plug in hybrid or EV, this is probably the best way to do this.
It's also an election promise, and part of the coalition agreement, so not really a surprise.
I don't think electric is a problem in the current system, I think hybrid vehicles are the issue. Electric cars operate entirely in one system, but hybrids are across two systems with an unclear split.
We saw the government change their mind over RUC rates for hybrids due to pushback over what the rate should be, because they are split between two systems. And thatsthat'sonly the plugin hybrids. Non-plugin ones don't charge from electricity so are not under the RUC system, but use a lot less petrol than other petrol cars so pay less tax.
I agree this is not a surprise. It also should help the people claiming their tax back for off-road use of vehicles (I presume they won't need to do this paperwork anymore).
I do wonder if they are prepared for the debts and debt collection that will inevitably come from a system like RUC. You can't not pay petrol tax, you can just not pay RUC. As a RUC payer, I'd be keen for some system where it pays itself.
I've got a diesel vehicle myself, I'd love a system that automatically pays RUCs. They exist, but are aimed at businesses with a fleet of vehicles.
With electric vehicles, while they operate purely on electricity, taxing it would be a nightmare as you can "refuel" an EV anywhere.
Oh my point wasn't that we should tax EVs at the charger, but that RUC for EVs can coexist fine with petrol tax. It's the grey areas of hybrids that really drive the need for petrol vehicles to be on the RUC system.
I definitely agree with you there.
I wonder how they're going to manage the petrol companies from keeping the cost high and pocketing the extra once fuel tax is gone. Is the pricing breakdown of fuel freely available to the public?
Yes, the amount of excise added to fuel is public information.
Also, our fuel market is quite competitive, as long as you have one of the independent retailers in the area at least. Someone will be the first to move, and the others will follow.
The current system of excise tax rewards those with efficient cars (though not EVs) and penalises big polluters.
Unless this comes with an additional carbon/pollution penalty this is going to be great news for V8 Commodore drivers, and terrible news for everyone driving a Toyota Aqua.
In the mean time, salty EV owners get to pay triple the road tax per km that a petrol driven Prius does.