NEW Zealand plans to extend its road tax exemptions for electric vehicles in an attempt to encourage motorists to use emissions-free vehicles.

The plan, which could come into effect next year, will save owners of electric vehicles nearly $600 a year in taxes.

A Regulatory Impact Statement issued by the Ministry of Transport said transport accounts for 17 to 18 per cent of New Zealand’s greenhouse gas emissions.

“Of this, 89 per cent are from road transport, with the majority from the light passenger and commercial fleet (81 per cent).

“Emissions from the transport sector are currently 63 per cent above 1990 levels and, without intervention, are projected to be 75 per cent above 1990 levels by 2020.

“New Zealand’s contribution to the new global climate agreement negotiated in Paris in December 2015, is to reduce greenhouse gas emissions by 30 per cent below 2005 levels, by 2030.”

The ministry sees EVs – including plug-in hybrids and battery-electric vehicles – as being one part of the solution of reducing vehicle emissions.

It said current legislation exempts EVs from paying the Road User Charges (RUC) until June 30, 2020.

Now it wants to see the impact of extending that RUC exemption beyond 2020 to encourage more EVs on New Zealand roads.

The RUC applies to road vehicles that do not pay an excise at the fuel bowser – that is, diesel-engined vehicles. The RUC is $NZ62 per 1000km.

Diesels are exempt from paying tax at the bowser because many diesel-fuelled vehicles are not licensed for the road – for example, farm machinery – and therefore should not be required to subsidise roads.

The ministry said the value of the existing RUC exemption is about $558 per vehicle, per year, based on an average distance travelled in a sample of EVs.

The sample of 297 electric vehicles in New Zealand travelled an average of 9002km a year.

In its favour, the impact statement said the extension of the RUC exemption will boost EV usage. On the downside, the ministry would lose revenue.

---

The ministry is now considering five options:
Option 1: the status quo – the RUC exemption applies to light electric vehicles until June 30, 2020 by which time they are expected to make up about one per cent of the light vehicle fleet;

Option 2: amending the RUC exemption for light electric vehicles to apply from the date each vehicle is registered in New Zealand, for a finite period (for example, five years);

Option 3: extending the RUC exemption to apply until two per cent of the light vehicle fleet is electric;

Option 4: extending the RUC exemption to apply to heavy electric vehicles until two per cent of the heavy vehicle fleet is electric;

Option 5: amending the RUC Act to enable a discounted RUC rate for heavy electric vehicles.

---

The ministry said that this year, there would be 1950 EVs on NZ roads, increasing to 3950 in 2017 and up to 31,950 by 2020 and 63,950 in 2021.

By 2021, EVs would represent 2.06 per cent of the country’s transport fleet.

The ministry said it would forgo $NZ35.7 million in RUC revenue in 2021 because of the exemption.

But though the income would be affected, the report said extending the exemption until two per cent of the fleet is EV – Option 3 – would be more effective than continuing the current scheme.

“This option would be more effective than the status quo. In the short term, it helps support the business case for fleets that are considering purchasing electric vehicles,” the report said.

“It is also a stronger signal of the government’s support for electric vehicles because it demonstrates the government’s willingness to incentivise electric vehicle uptake until it has reached a more significant level of traction in the market.”

The report said that no formal public consultation has been undertaken.

“Formal public consultation will be undertaken as part of the legislative process to implement the decisions regarding RUC payable by electric vehicles that may be agreed by cabinet,” it said.

“No public consultation is proposed if cabinet’s decisions do not require legislative amendment because the changes will not impose any additional costs on businesses, road users or the general public.”

Any changes to the RUC and the EV exemptions will have to now go through the New Zealand cabinet via an Electric Vehicle Bill.

The report said it is expected to be enacted by June 30, 2017.

 

By Neil Dowling