Who funds our transport system?

Much of New Zealand’s transport system is user pays. Motorists mainly pay through petrol tax or diesel road user charges, followed by nearly a third coming from local government and smaller portions from general tax and public transport fares.

Mark Stockdale AA Senior Policy Analyst, explains who pays for our transport system and where the money goes.

A typical car travels just under 12,000km per year. Assuming fuel consumption of about nine litres per 100km, means that motorists pay just over $1,000 per annum in petrol tax. Of this $643 goes towards road building and maintenance, public transport and other land transport funding, $75 is for ACC levies, and the remainder is GST.

Funding-sources.jpgDiesel users pay no transport tax or ACC levies at the pump, so contribute through road user charges (RUC) instead. A diesel car travelling the same mileage per year (12,000km) would contribute $647 in RUC (excluding GST). By comparison, a 44 tonne truck and trailer travelling 100,000 a year pays about $57,600 a year in RUC.

Since 2008, petrol tax has risen over 16 cents per litre, or an additional $179 a year for a typical car. RUC has also increased – up 50 percent in the case of cars and other light vehicles.

Prior to 2008, 18.7 cents in petrol tax was diverted to general government funds, but now all of the tax and RUC is earmarked for the National Land Transport Fund (NLTF). This funds all the costs of the state highway network: building new highways, maintenance and repairs, safety upgrades and police enforcement. The NLTF also covers half the cost of local roads, with the other half coming from local government contributions.

The NLTF also funds a quarter of public transport operating costs, with another quarter coming from ratepayers and the balance from fares.

The cost of introducing new public transport projects (for example park and ride facilities) is split 50:50 between road users and ratepayers.

42-45 AAD Road tax v6.indd
42-45 AAD Road tax v6.indd
42-45 AAD Road tax v6.indd42-45 AAD Road tax v6.indd

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