Putting petrol taxes in context

March 17th, 2009 at 11:00 am by David Farrar

I have long advocated roads should be user pays and until we get the technology to monitor and charge actual road usage, is the closest we have to it.

People are focusing on the 6c/l extra petrol tax that will be in place in two years time, but overlooking that in many areas petrol prices would be increasing by up to 13c/l. A regional tax of up to 10c/l and an increase in national petrol tax of 3c/l.

Personally I think the level of petrol tax should vary automatically to fund all road projects that pass a certain benefit:cost ratio.

Tags:

25 Responses to “Putting petrol taxes in context”

  1. PhilBest (5,120 comments) says:

    Agree completely, DPF. Very good suggestion. “….the level of petrol tax should vary automatically to fund all road projects that pass a certain benefit:cost ratio….”

    The role of the roading system in the efficiency of our economy makes action of this sort absolutely vital.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  2. PhilBest (5,120 comments) says:

    Essential reading: (and evidence that not all Transport Policy papers out of Europe are Green propaganda)

    http://www.mobilityeurope.eu/easydata/customers/mobility/files/EU_Articles/Transport_report_for_conference_12th_July_2005.pdf

    “European Transport Policy: Strangling Or Liberating Europe’s Potential?” By Ari Vatanen and Malcolm Harbour

    Some key findings:

    “90% of travel in the EU is by car”.
    “Transport modes are not simply interchangeable”.
    “Public Transport operates effectively within specific niches”.
    “In the great majority of cases, travel by road cannot be made any other way”.
    “The smooth running of modern economies relies on road transport. Cars play a large role in economic productivity and the enlargement of markets”.
    “The high costs of public transport subsidies weighs heavily on Europe’s economy”.
    “The “external costs” (air pollution, etc) of vehicle use is covered many times over by the net taxation revenues specifically levied on road users”.
    “Since 1985, emissions levels of each new vehicle coming to market have been reduced by a factor of at least 10, and even though traffic volumes have increased, air quality in Europe’s cities is improving spectacularly”.
    “Investments in Rail would take 10,000 years to recoup in terms of reduced CO2 emissions”. (in other words, when the rolling stock wears out, in 30 years, we are still 9,970 years behind in terms of recouping our “investment”).

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  3. andrei (2,531 comments) says:

    How about using the tax currently collected from petrol to fund roads instead of diverting a portion into the consolidated fund?

    Don’t forget also that GST on Gas increases when Gas goes up = a tax on a tax.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  4. big bruv (13,552 comments) says:

    Please do not let us on the right fall into the trap of agreeing with everything the government does simply because we voted for the bastards.

    The truth is that we would be screaming from the roof tops if Labour had been advocating an increase in fuel tax.

    Key has made a number of fuck ups in the last ten days, this is just another one and it should be resisted by all.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  5. brucehoult (193 comments) says:

    I don’t know how you’d do a “road use” tax that didn’t have severe negative effects. Just look at the road user charges for diesel (and electric [1]) vehicles. Last I looked, it cost about 3.5c per km for quite a range of vehicle weights, from 2 tonnes down to zero. There are small motorcycles which have approximately this running cost in total when running on petrol (which already has a large tax component in it). If you have a diesel or electric motorcycle (and I have seen electric scooters around town) then you legally have to pay as much in road user charges alone as it would cost to run on petrol. And that’s before you buy any diesel or electricity!!

    The great benefit of a per liter tax is that it to a large degree scales automatically with the size, weight, and road damaging potential of the vehicle, and does not reduce the natural incentive for people to get a more efficient vehicle.

    [1] The law says that owners of vehicles powered by a fuel that isn’t taxed at source (eg diesel, electricity), regardless of the weight of the vehicle, must pay road user charges. http://www.landtransport.govt.nz/factsheets/38.html

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  6. chrisw76 (85 comments) says:

    Having just purchased a much more efficient diesel vehicle, it is somewhat grating that because RUC are static per km the effective per litre cost has gone up. Of course, I do use substantially less litres of diesel than petrol, but it does seem inconsistent. It would probably be fairer if everybody paid RUC, but I can imagine how administratively challenging that might be.

    Cheers, Chris W.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  7. greenfly (1,059 comments) says:

    Big Bruv nails it perfectly,
    “Please do not let us on the right fall into the trap of agreeing with everything the government does simply because we voted for the bastards.

    The truth is that we would be screaming from the roof tops if Labour had been advocating an increase in fuel tax.”

    Not a squeak, not a squeak (bar that from Big Bruv) about MORE TAX
    Roll over onto your backs and let Key have his way with you, adoring fans!

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  8. NeillR (350 comments) says:

    Though i’m heartily opposed to tax for taxes sake, i can see the merit in user pays. What gets me riled up though is why petrol tax is used to fund public transport.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  9. OECD rank 22 kiwi (2,820 comments) says:

    Tax is thief.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  10. MT_Tinman (3,043 comments) says:

    “Personally I think the level of petrol tax should vary automatically to fund all road projects that pass a certain benefit:cost ratio.”

    Well I bloody don’t!

    Roading and in fact ALL infrastructure should be paid for by ALL beneficiaries of that infrastructure not just a selected, particularly vulnerable few within that beneficiary group.

    Petrol theft should be reduced to GST only with the rest of funding coming from universal taxation.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  11. Bryan Spondre (225 comments) says:

    @big bruv for those of us in Auckland this is a significant reduction in fuel tax from what we would have been paying. Reading Joyce’s press release helped me to realise just how silly the regional fuel tax was.

    1) It would have created the ludicrous situation of petrol being 13 cents a litre more expensive at the Bombay Service Centre than the Mercer one a few k’s down the freeway.

    2) Around half of NZ’s population live within a 2 hour drive of central Auckland. No doubt almost all of these people drive along or through Aucklands freeway system to destinations in Auckland or on the other side of Auckland. Why should the cost of that freeway be born by all of them instead of just the ones living with the regional boundaries.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  12. big bruv (13,552 comments) says:

    Bryan

    Unlike certain nutbars from Canterbury I have no issue with Auckland receiving the vast bulk of money when it comes to roading, I believe that income generated by fuel tax should be used in the areas it is gathered from.

    Regional fuel tax is indeed a stupid idea, we do not need to increase fuel tax at all, spend all the money raised by RUC and fuel tax on the roads and there is no problem. There should be no syphoning off to subsidise public transport.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  13. pdm (842 comments) says:

    I commented a couple of times last week on these lines for roading:

    1. Raise funds for each roading requirement by Government Infrastructure Bond Issues. Place rate at say 1% or even 1.5% abover bank Term Deposits for say 20 yar terms.
    2. Use tolls to fund 6 monthly interest payments and eventual maturity repayments

    We are hearing Grey Power and other organisations saying that savers are suffering due to the fall in interest rates so it should be easy to have attractive propositions fully subscribed.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  14. OECD rank 22 kiwi (2,820 comments) says:

    Do I need to say any more:
    Andrew Ryan’s Speech

    “I am Andrew Ryan and I am here to ask you a question: Is a man not entitled to the sweat of his brow?

    No, says the man in Washington. It belongs to the poor.
    No, says the man in the Vatican. It belongs to God.
    No, says the man in Moscow. It belongs to everyone.

    I rejected those answers. Instead, I chose something
    different. I chose the impossible. I chose…
    Rapture.”

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  15. OECD rank 22 kiwi (2,820 comments) says:

    A few more words of wisdom:
    Best of Andrew Ryan

    “What is the difference between a man and a parasite? A man builds. A parasite asks ‘Where is my share?’ A man creates. A parasite says, ‘What will the neighbors think?’ A man invents. A parasite says, ‘Watch out, or you might tread on the toes of God…”

    “On the surface, the Parasite expects the doctor to heal them for free, the farmer to feed them out of charity. How little they differ from the pervert who prowls the streets, looking for a victim he can ravish for his grotesque amusement.”

    “I believe in no God, no invisible man in the sky. But there is something more powerful than each of us, a combination of our efforts, a Great Chain of industry that unites us. But it is only when we struggle in our own interest that the chain pulls society in the right direction. The chain is too powerful and too mysterious for any government to guide. Any man who tells you different either has his hand in your pocket, or a pistol to your neck.”

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  16. freethinker (685 comments) says:

    Big Bruv
    Hope you also agree that the electricity lines ugrade should be paid for by the main beneficiaries in the N Island – say 75/25 North/South?

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  17. big bruv (13,552 comments) says:

    freethinker

    Only if you agree that the South Island should pay a premium in road tax given that up until now those who live in the upper part of the North Island have subsidised your roads for the last fifty or so years.

    Really, you guys should just get over it.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  18. baxter (893 comments) says:

    I rejected those answers. Instead, I chose something
    different. I chose the impossible. I chose…
    Rapture.”…………………………….Sorry OECD I must be thick I can’t get the punchline.

    I also agree that the universal tax increase is more efficient. No-One loses, had the status quo remained every Regional Council in the country including those in the South Island would have increased their levy to the maximum allowed.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  19. Nigel (515 comments) says:

    This is the first genuine stuff up National have made in my book, not the tax per se, that was inevitable, but the perception ( real or otherwise ) that the rest of NZ is paying for Auckland’s motorways, the fact that aucklanders drive like utter c**p on the ones they have already makes the prospect even more galling.

    Forgot to mention the North Shore Mayor is Labour’s best mate right now & political dynamite for National, what a moron.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  20. Dobbie (36 comments) says:

    I liked the pragmatism of the ‘no regional fuel tax’ announcement. Despite RNZ’s ‘the rest of the country to pay for Auckland’s roads” byline, it seems a much more practical approach.

    Saying that I’m worried by what I perceive to be a ‘more roads’ mentality. I was (un) lucky enough to work with LTNZ for a number of years and was struck by the ‘roading’ mentality. Their approach to everything was more roads, more roads. Emmissions problem? Simple – build more roads to get traffic flowing more freely. Gridlock in Wellington? Build more roads. Public Transport was for poor people. Cycling was for kamikazes. And walking was for Ian Botham. Those guys are really stuck in the ’60’s. Isn’t the international experience clear enough? Build more roads, get more cars. Anybody been on the London Ring Road recently? Anyway I hope the Minister gets his head round that. Build more roads, get more cars. How can that be productivity-enhancing? It’s pretty simple isn’t it? Maybe I’m missing something? Can anybody enlighten me?

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  21. Bryan Spondre (225 comments) says:

    Bernard Hickey continues his fisking of rail transport here with this: “Says who? How many more Aucklanders are using rail? It’s currently a tiny proportion that is massively subsidised (up to NZ$10 a ticket) and would have been dwarfed by the extra commuters using cars, bikes and buses.”

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  22. insider (1,030 comments) says:

    Not many people realise there is already a regional fuel tax on petrol. It goes to city and district councils based on sales in their areas. I can’t understand why they don’t increase that rather than the general tax. I suppose it means some areas will get “too much” money.

    In many respects this decision makes funding the same as for electricity. People in Wellington and the South Island are equally funding the $1 billion plus investments Taupo north as those in the areas benefitting.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  23. brucehoult (193 comments) says:

    Q: What is the difference between a for-profit organization and a public service organization?

    A: when a for profit organization invests in extra capacity and then all the extra capacity is used up by customers they regard themselves as being extremely successful, and plan another round of expansion.

    When a public service organization is in the exact same situation, they decide that “that solution didn’t work” and it’s pointless, and they should maybe try reducing capacity instead.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  24. OECD rank 22 kiwi (2,820 comments) says:

    baxter says March 17th, 2009 at 1:16 pm:

    Sorry OECD I must be thick I can’t get the punchline.

    Andrew Ryan is a character from the computer game “Bioshock”.

    Rapture is an underwater haven he built out in the middle of the ocean in order to build his ideal new society away from the grasping hands of collectivists.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  25. OECD rank 22 kiwi (2,820 comments) says:

    Personally I think the level of petrol tax should vary automatically to fund all road projects that pass a certain benefit:cost ratio.

    Personally I’m sick of big government pissing away taxpayer’s money on worthless projects just to make some MP look big.

    What was one of the first things Winston Peters did after becoming Treasurer in 1996? Put petrol duty up. How did that work out?

    National are just looking for an easy way to gather additional revenue to fund their “BIG GOVERNMENT projects.
    Expect another tax grab in the budget. It will most like be Alcohol Duty to rise by some large silly amount with some equally lame statement on social grounds to justify the increase.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote

Leave a Reply

You must be logged in to post a comment.