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Petrol-powered vehicles in New Zealand will soon face distance-based charges – joining diesel, electric and plug-in hybrid cars – rather than a fuel excise, with calls for Australia to follow.
Road-user charges based on distance travelled and vehicle weight will soon apply to petrol-powered cars in New Zealand, in the country's "biggest change" to how it funds its road network in 50 years.
While light- and heavy-duty diesel, electric and plug-in hybrid vehicles in New Zealand already face a road-user charge, petrol cars have been excluded as there is a fuel excise duty of around $NZ0.70 ($AU0.64) per litre of unleaded sold.
The New Zealand Government has "agreed" to legislative changes which will see the fuel excise duty – similar to Australia's petrol and diesel excise of 51.6 cents per litre – scrapped for road-user charges covering vehicles of all fuel types.
Money received from New Zealand's fuel excise and road-user charges is "funnelled into the National Land Transport Fund which funds the building of new roads and maintaining our existing ones".
However, the government argues that the increased number of fuel-efficient vehicles on New Zealand roads – including non-plug-in hybrids – contribute less to road maintenance, as drivers do not need to fill up as often.
"For decades, petrol tax has acted as a rough proxy for road use, but the relationship between petrol consumption and road usage is fast breaking down," NZ minister for transport Chris Bishop said in a media release.
"Petrol vehicles with better fuel economy contribute less [fuel excise] per kilometre towards road maintenance, operations, and improvements."
Electric and plug-in hybrid vehicles were initially exempt from New Zealand's road-user charges – historically applied to diesel cars and trucks – but have been required to pay the distance-based tax since early 2024.
Currently, plug-in hybrid electric vehicles must 'double-dip' as they are required to pay fuel excise on any petrol purchased, along with a distance-based road-user charge, which is taxed at a lower rate than diesel and battery-electric cars.
Earlier this year, Australian federal treasurer Jim Chalmers reportedly said a national road-user tax for electric vehicle (EV) drivers is on his agenda, with similar concerns to New Zealand about a decline in fuel excise revenue from low- and zero-emission vehicles.
"We need to pay for roads somehow," Chalmers reportedly said.
The Victorian Government's road-user tax for electric and plug-in hybrid vehicles was ruled unconstitutional by the High Court of Australia in October 2023 after it was found to be a "duty of excise", which is a Federal Government responsibility.
Australian Electric Vehicle Association president Chris Jones said in January 2025 that a national road user charge should apply to all vehicles in Australia, and replace the fuel excise entirely.
"A universal, mass × distance road user charge should eventually replace fuel excise as the user-pays component of roads and their maintenance. This should also be extended to heavy vehicles, as trucks are responsible for the bulk of road damage," he said.
"Australia’s two most popular family vehicles [the Ford Ranger and Toyota HiLux] tip the scales at well over two tonnes, and neither of them are EVs."
Jordan is a motoring journalist based in Melbourne with a lifelong passion for cars. He has been surrounded by classic Fords and Holdens, brand-new cars, and everything in between from birth, with his parents’ owning an automotive workshop in regional Victoria. Jordan started writing about cars in 2021, and joined the Drive team in 2024.
