Are non-Aucklanders paying the regional fuel tax?

Wednesday, 12 September 2018

Aucklanders have mixed views on the fuel tax which was brought in on July 1.

The Ministry of Transport can't yet say whether Auckland's 10-week-old regional fuel tax is being partly paid by those outside the city limits.

'It is extremely difficult to isolate different influences on fuel pricing,' said adviser Brent Lewers in a four-page memo to Transport Minister Phil Twyford.

An official quarterly monitoring report on the 11.5 cent a litre Auckland tax is due out next month, and the ministry said its view was largely shaped by feedback from 'trusted industry participants'.

The ministerial memo said work published by data scientist Peter Ellis showed prices in Wellington and the South Island rising more sharply than other non-Auckland markets since the tax was introduced on July 1, but the grounds were unclear.

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'His view is that these price trends could reflect tax spreading,' said Lewers.

'An alternative argument is that these price trends could reflect fuel companies continuing to exploit the ability to set higher prices in parts of the country in which (discount brand) Gull does not operate.'

Gull previously said it thought fuel companies would pay the regional fuel tax bill, partly from sales made outside Auckland.

The tax is expected to raise $1.5 billion over a decade to help pay for transport projects in the city.

'Z Energy and BP, who between them make up more than 50 per cent of retail fuel sales, are prepared to publicly stand behind statements that they are not spreading RFT,' Lewers said, citing feedback from the two oil companies.

The ministry told Twyford that Z Energy, in a statement, had said it raised prices at all its Auckland outlets by 11.5 cents on the tax's introduction.

'Since then, on average it has maintained at least an 11.5 cents per litre differential,' he said.

The memo said another industry source, which asked not to be named, hinted at price spreading.

'It did consider that there were two sites, belonging to the same fuel distributor, where it thought tax spreading may be occurring.'

'These could simply be sites where the distributor had decided to accept a very low, or negative, margin,' said the ministry.

The AA, which had called for the price monitoring to be built into the fuel tax legislation, said it was too early to gauge how oil companies were funding the tax due on fuel sales in Auckland.

'It needs to be a bit more long-run,' spokesperson Barney Irvine said.

'We are waiting with a great deal of interest on the first monitoring report, due in October.'

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