2022 New Zealand fuel tax subsidy explained

In March 2022 the New Zealand government reduced a fuel tax after a cost of living crisis brought on by the COVID-19 pandemic and the Russian invasion of Ukraine. After multiple extensions to the subsidy's end date, it ended in June 2023.

Background

New Zealand was suffering from a cost of living crisis brought on by the COVID-19 pandemic, the Russian invasion of Ukraine, among other factors. In February 2022, fuel prices had risen by 13%.

History

The cuts started in March 2022. Fuel prices would be reduced by 25 cents, and train and bus fares halved; there was also a 36% diesel discount.[1] [2] Originally, these were planned to last only three months, ending in June. Prime Minister Jacinda Ardern at the time said that this would save between $11.50 and $17.25 per tank of fuel. In the May 2022 New Zealand budget, the subsidy was extended until January 2023.[3] In December 2022, the government extended the cuts until the end of February, then would halve the cuts to 12.5 cents per litre and end the subsidy on 31 March.[4] In February 2023, the government announced that it would extend the fuel cuts until the end of June.

On 1 July 2023, the fuel tax cuts were removed.[5] People lined up at petrol stations before the tax cuts ended, and many people took multiple trips. Some people urged motorists to refuel early to avoid queues or fuel shortages.[6] The end of the subsidy caused a large increase in the number of Gaspy users, a fuel price monitoring app.[7]

Cost

The cost to the government of the initial three-month period was $350 million. The extension until June 2023 cost $718 million. In total, it was estimated that $2 billion was spent on the subsidies.

Notes and References

  1. Web site: McConnell . Glenn . 26 June 2023 . Boost for foodbanks as fuel tax cut, half-priced public transport, ends . 4 November 2023 . Stuff . en.
  2. Web site: Petrol stations slammed as Govt fuel subsidy comes to an end . 4 November 2023 . 1 News . en.
  3. Web site: 14 December 2022 . Fuel tax cuts: What you need to know . 29 October 2023 . RNZ . en-nz.
  4. Web site: 29 October 2023 . 'It will come to an end': No more fuel tax subsidy after June . 29 October 2023 . NZ Herald . en-NZ.
  5. Web site: Mcilraith . Brianna . 27 June 2023 . Explainer: Everything you need to know about the fuel tax cut ending . 29 October 2023 . Stuff . en.
  6. Web site: 25 June 2023 . Motorists urged to fuel up early to avoid shortages . 4 November 2023 . Otago Daily Times Online News . en.
  7. Web site: Cann . Geraden . 3 July 2023 . Surge in members of Gaspy app as New Zealanders seek out cheaper petrol . 4 November 2023 . Stuff . en.