Regional fuel tax Te Tāke ā-Rohe mō te Hinu

After the regional fuel tax came into effect in Auckland, we reviewed the range of situations where someone can claim a rebate of regional fuel tax.

Further entitlements were put in place for specific circumstances where fuel, mainly diesel, is used off-road. The final report recommended no additional entitlements due to the likely administrative cost and risk of fraud.

Review of fuel refunds and rebates

A 10 cent per litre regional fuel tax applies to petrol and diesel sold in the Auckland region from 1 July 2018 until 30 June 2028.

The Land Transport Management (Regional Fuel Tax Scheme—Auckland) Order 2018 sets out the rate of tax, how long it is in place for and the transport projects it will fund.

Land Transport Management (Regional Fuel Tax Scheme—Auckland) Order 2018(external link)

Auckland Transport also provides information about how the tax works in the Auckland region and the projects it funds.

Auckland Regional Fuel Tax(external link)

Before the legislation was passed, Auckland Council consulted the public between 28 February 2018 and 28 March 2018 on a regional fuel tax in Auckland, including the projects it would fund. We completed an RIA on the proposal.

Auckland Council minutes of meeting 31 May 2018(external link)

How the Auckland region is defined

For the purpose of a regional fuel tax the Auckland region excludes the Great Barrier Local Board Area. Maps that provide the boundaries for the Auckland region and the Great Barrier Local Board Area are on the Waka Kotahi NZ Transport Agency website.

Maps of the Auckland region(external link)

Reporting on the revenue and how it is used

In their annual reports:

• Auckland Council must report on regional fuel tax revenue and expenditure, including delivery of each project the tax funds, and
• Waka Kotahi must report on revenue raised by the tax and what it costs them to administer it.

Waka Kotahi produces quarterly reports on the impact of the regional fuel tax on fuel prices, fuel distribution in Auckland and compliance with the legislation.

 Regional fuel tax quarterly reports(external link)

After a select committee process that included 500 public submissions, Parliament passed the regional fuel tax legislation into law on 26 June 2018.

The regional fuel tax legislation provides a way for regional councils, initially only Auckland Council, to raise revenue for transport projects that would otherwise be delayed or not funded.

The legislation provides that a regional council may propose a regional fuel tax, consult the public on the proposal and submit the proposal to the Ministers of Transport and Finance for a decision. Ministers have complete discretion when deciding on a regional fuel tax proposal.

Land Transport Management (Regional Fuel Tax) Amendment Act 2018(external link)

Land Transport Management (Regional Fuel Tax) Amendment Bill — submissions and advice(external link)

Waka Kotahi is responsible for implementing the legislation. This includes:

• collecting the tax from fuel companies
• administering exemptions
• paying rebates
• monitoring, and
• enforcement. 

Before Cabinet approved the introduction of the Bill, the Ministers of Transport and Finance made decisions on issues that arose when the legislation was being drafted. Cabinet agreed to the Bill being introduced to Parliament.

Before the Bill was introduced, we provided advice about several issues including:

• how regional councils could propose a regional fuel tax and the information they needed to providein a proposal
• the process for implementing the tax
• the maximum rate of regional fuel tax and how this could be amended
• how the collection of the tax would be managed.

We also noted that regulations would be needed to decide who would be eligible for a rebate on petrol and diesel for off-road uses.

The RIA that accompanied the Cabinet paper requesting approval to introduce the Bill covered:

• alternatives to a regional fuel tax
• a cost-benefit analysis
• risks associated with implementing the tax and how they can be managed
• the views of key stakeholders.

The Bill was introduced to Parliament on 22 March 2018 and was referred to the Financial and Expenditure Select Committee for consideration and public submissions.

Cabinet approved the overall policy design of the regional fuel tax and agreed that the legislation could be drafted. The Ministers of Transport and Finance were authorised to make final decisions about any details that arose during the drafting of the Bill.

Cabinet agreed that a regional fuel tax would:

• provide funds for a programme of transport projects that benefits a region that would otherwise not be funded or would be delayed
• require the approval of the Ministers of Finance and Transport, before a regional fuel tax could be implemented
• have a maximum rate and have a maximum duration of 10 years
• apply only to petrol and diesel, and
• be administered by Waka Kotahi and collected when fuel is distributed to a retailer.

We provided advice to the Minister that new legislation would be needed for a regional fuel tax in Auckland. We outlined alternative ways that councils could raise revenue for transport projects and potential issues associated with a regional fuel tax

We also provided advice about:

• how a regional fuel tax could be implemented in any region
• allowing Auckland Council to make a proposal for the tax
• having the tax in place for a maximum of 10 years before it was reviewed
• collecting the tax when fuel is distributed to retailers.

The Minister directed us to draft a Cabinet paper and agreed to consult the Ministers of Finance and Local Government about the policy.