17 Mar 2009

Regional fuel tax scrapped, national levy increased

3:12 pm on 17 March 2009

Motorists throughout the country are facing another increase in fuel tax after the scrapping of the regional fuel tax for Auckland.

The changes are part of a larger transport package announced on Monday.

The Government confirmed it is dropping the regional fuel tax and partially replacing it with a national increase of three cents a litre this year and another three cents in 2010.

The regional tax, due to be phased in from July, would have added 9.5 cents a litre to the cost of fuel for Auckland drivers and was intended to pay for projects including the electrification of Auckland's rail system.

The regional council's chairperson, Mike Lee, says the local fuel surcharge would have brought in $202 million, and there are concerns that the Transport Agency may not have funds to bridge the gaps.

Mr Lee says the decision could also put many jobs at risk.

The Auckland Regional Transport Authority is preparing to call for tenders for 140 new electric units, and to order a region-wide electronic ticket system for all public transport.

Transport Minister Steven Joyce said while the electrification project is safe, others, including the ticketing system, will have to compete for state funding.

Mr Joyce also said it has been decided in principle that state-owned KiwiRail should be the owner of new rail stock in Auckland and Wellington, rather than regional councils.