Here's why there's no lag in fuel tax coming back

Friday, 30 June 2023

Petrol companies are expected to reintroduce the fuel tax in full from Saturday, even though the petrol motorists buy will have been taxed at a lower rate.

From Saturday, the fuel tax returns in full, adding another 25c of tax, and about 4c of GST, to the price motorists pay.

It was cut in March last year, as the Government sought ways to help New Zealanders cope with the rising cost of living.

AA principal policy adviser Terry Collins told Stuff earlier in the month petrol tax was paid when the shipment was unloaded at ports. He said that meant petrol currently at the pumps would have had the lower rate applied. The higher tax would not take effect until the next shipment arrived.

But a Z Energy spokesperson said, because the fuel excise duty (FED) was a tax that it collected on behalf of the Government, its intent was to reflect the return of the FED via pump price increases from Saturday.

“This is in line with the approach we took in March 2022 when the reduction of the FED came into effect and Z ensured this was immediately passed on to customers.”

A BP spokesperson said it refused to “speculate” on pricing.

Gull has been approached for comment.

Infometrics chief economist Gareth Kiernan said because of companies’ quick move to cut the tax 15 months ago, it would be inconsistent to expect them to not reinstate the higher excise rate until fuel that crossed the border in July reached the pump.

“There might be a chance for an individual chain to try and grab market share by delaying the pass-through until July petrol reaches the pumps, but the large price discrepancy with other retailers would be likely to create a rush on their stations, potentially causing them to run out of product if their trucking and distribution is unable to keep up with demand,” he said.

“Not being able to supply potential customers effectively undermines any positive effects of lower prices in trying to grow market share on a sustained basis.”

He said there was no reason for prices to rise beyond 29c a litre. “International oil prices have been pretty steady for the last month, as has the NZ dollar.”

Last year, queues formed at stations across the country after motorists were warned of a price hike, which meant prices rose up to 30 cents a litre in some places.

Demand had already begun to increase on Friday morning. The BP spokesperson said there has been an increase in fuel sales, but no concerns or problems reported at BP retail centres.

The Z spokesperson said it expected service stations were likely to be busier than usual ahead of the FED reinstatement.

“Our sites are set up to safely manage traffic flow and we also offer customers multiple ways to pay – including pay by plate and pay at pump – to make it easy for them to fuel up and go as efficiently as possible.”

Fuel price comparison app Gaspy usually has about 500 new users a day, but director Mike Newton said in the past week it had been averaging more than 1200 a day, with 1800 on Thursday alone.

“Daily active users fluctuates between 35,000 and 60,000 users depending on the day of the week. Our biggest day so far this week was Wednesday with 123,500 and Monday and Thursday both registered over 90,000 active users.”