The Future of Road Funding: Electronic Road User Charges for All Light Vehicles
New Zealand is about to see one of the biggest shifts in how we pay for and maintain our roads. The Government has confirmed that all light vehicles will transition to an electronic road user charging (RUC) system, moving away from the long-standing petrol excise duty (FED) model. This change aims to create a fairer, more efficient way of ensuring everyone contributes to the cost of keeping our roads safe and reliable.
Why the Change?
For decades, road funding has relied heavily on petrol excise duty – a charge of about 70 cents per litre on every litre of fuel purchased. While simple, this system is becoming outdated as more New Zealanders switch to hybrid and electric vehicles. Fuel efficiency gains also mean that many drivers are paying less tax despite using the roads just as much, or in some cases, more.
Currently, diesel and heavy vehicles already pay through the road user charges (RUC) system, which is based on distance travelled and vehicle weight. The Government now plans to extend this to all light vehicles, including petrol-powered cars, in order to create a more consistent and fair approach.
What Will the New System Look Like?
The existing RUC system is largely paper-based and can be cumbersome to manage. That’s about to change. The move will involve the development of a new digital RUC platform, designed to make the process as seamless as possible.
Some key features include:
Distance + Weight Model: Charges will be calculated based on how far you drive and the type of vehicle you own.
Gradual Phase-Out of Petrol Excise Duty: The current FED system will be phased out, meaning the cost of fuel at the pump will reduce over time.
Flexible Payment Options: Drivers will be able to pay their RUC digitally, with options such as post-pay, pre-pay, or monthly billing – much like a power bill.
Third-Party Providers: From 2027, private companies will be able to offer innovative RUC services, making the system more user-friendly and tailored to driver needs.
The Benefits of Electronic RUC
The move to electronic RUC is being welcomed by industry experts and motoring groups alike. Here’s why:
Fairer for Everyone: Road costs will be based on actual use, rather than how much fuel your car consumes.
Future-Proof: As EV adoption rises, the old petrol tax model would have left a large funding gap. Electronic RUC ensures that all vehicles contribute.
Efficiency: Digital systems reduce paperwork and provide greater flexibility for businesses and individuals managing fleets.
Transparency: Drivers will have a clearer understanding of what they’re paying for road use.
Looking Ahead
By the end of the decade, New Zealanders could be managing their road user charges as easily as they pay for a Netflix subscription. While it will take time to adjust, the new system is designed to be more equitable, sustainable, and adaptable to the changing transport landscape.
The bottom line: every driver contributes fairly, every kilometre counts.