Road users with a petrol vehicle contribute to the funding of our land transport system through petrol excise duty. Road users with a diesel vehicle (or have a vehicle that weighs over 3.5 tonnes) pay road user charges. This page explains the difference in cost between the different systems.
Comparison calculator of petrol excise duty and road user charges
It is important to know the potential cost differences when you are looking to buy a new motor vehicle. To assist you, we have developed a calculator that estimates the different charges for light (3.5 tonnes or less) passenger petrol and diesel vehicles. The amount you pay in petrol excise duty or road user charges is not the only factor you should consider in choosing a motor vehicle.
Do petrol or diesel vehicles pay more?
On average, petrol and diesel vehicle users pay the same amount. The different systems mean that some road users contribute more and some less. For petrol excise duty, the fuel efficiency of your vehicles impacts how much you contribute. When purchasing a petrol vehicle find out its fuel efficiency.
Why do all diesel vehicles weighing 3.5 tonnes (or less) pay the same?
Whether a diesel vehicle is a small 1.5-tonne car, or a large van or SUV with a maximum laden weight of up to 3.5 tonnes, they are subject to the same road user charges. This is because vehicles in this weight range cause very little road damage.
The road user charges for vehicles weighing less than 3.5 tonnes are based mainly on costs that are applied to all vehicles. For example, costs such as drainage, signage, and the costs of building new roads. These costs exist regardless of vehicle weight, so they are applied evenly across all vehicle types and weights.
The costs associated with vehicle weight fall mainly on vehicles weighing more than 6 tonnes. Only 2 percent (around $1 per 1,000 kilometres) of the road user charges for vehicles weighing 3.5 tonnes or less relate to weight-based costs. This is similar for both 1.5 tonnes, and 3.5-tonne vehicles, so to simplify the vehicle types, there is one rate that applies to all light diesel vehicles.
Why not tax diesel at the pump like petrol?
Between 30 to 40 percent of diesel is used off-road. This includes farms, manufacturing, industrial and commercial ventures, and ships. Taxing diesel at a national level would impose an unfair burden onto these sectors. Operating a refund system would be costly and cumbersome to administer and involve compliance costs without any related benefit. A refund system would also potentially be susceptible to fraudulent refund claims.
Am I rewarded for my diesel vehicle’s fuel efficiency under the road user charges system?
Both petrol excise duty and road user charges act as proxies for recovering the costs of providing our land transport system, based on either petrol consumption or distance travelled on the road. Neither is designed to incentivise fuel efficiency.
A consequence of petrol excise duty is that a petrol vehicle user's contribution is directly proportional to the amount of fuel they use. This means that the better the fuel efficiency of a petrol vehicle, the smaller the contribution they will make. As road user charges are based on distance travelled the amount paid is proportionate to road use. As road user charges are based on distance travelled, the amount paid is based on distance travelled.
Ideally, to ensure greater fairness, petrol vehicles would be subject to road user charges as well. However, the current excise duty system is efficient to administer compared to road user charges, so such a change is unlikely to occur until technology improvements make road user charges less expensive to administer.
Am I still better off driving a diesel car?
The total cost depends on the fuel efficiency for the different vehicles you are comparing. The amount paid in petrol excise duty or road user charges is just one consideration when choosing a motor vehicle. To compare motor vehicles, please visit the NZ Transport Agency’s Right Car(external link) website.
For a light diesel vehicle, road user charges are set at a similar amount as the average petrol vehicle. Based on the average fuel efficiency of petrol vehicles, a petrol vehicle will pay slightly more petrol excise duty than an equivalent diesel vehicle will pay in road user charges. We estimate that a petrol vehicle averages 9.5 litres per 100 kilometres)
The benefits of running a diesel vehicle increase further once their superior fuel economy is taken into account. Fuel consumption tests generally give results between 20 and 30 percent better for a diesel engine car compared to the same model with a petrol engine.