27 Apr 2011

Government defers tax increase on fuel

1:15 pm on 27 April 2011

The Government is delaying a rise in fuel tax, citing tight economic conditions.

Transport minister Steven Joyce says an increase of 1.5 cents per litre will not be implemented as scheduled on 1 July.

He says, given the ongoing economic impact of the global recession and the Christchurch earthquakes, it makes sense to hold off on the increase for another year.

Mr Joyce says New Zealand can afford to delay a rise in fuel tax, though there may be a larger rise next year.

Future tax increases could be about 2 cents a litre in 2012 and 1.5 cents a litre in 2013.

But the minister told Checkpoint there may have to be an increase of up to 2 cents a litre next year to cover the delay.

This year's planned increase was part of a package of changes agreed to by Government in March 2009.

The changes included the cancellation of regional fuel taxes and their replacement with national increases to pay for roading projects.