Regional fuel tax will add to the cost of food

03 May 2018

Regional fuel tax legislation, as it stands, is likely to add costs to fresh fruit and vegetables for consumers.

Today, Horticulture New Zealand spoke to the Finance and Expenditure Select Committee about its written submission on the Land Transport Management (Regional Fuel Tax) Amendment Bill, that is endorsed and supported by a further 18 organisations. 

“While in principle, we agree with measures to reduce road congestion in Auckland, we believe there are unintended consequences of the Bill as it stands; these could include increases to the prices of healthy, fresh fruit and vegetables,” Horticulture New Zealand chief executive Mike Chapman says. 

“With the number of health issues related to diet in New Zealand, we believe it is important to not add unnecessary compliance costs that ultimately, increase healthy food prices.”

HortNZ is asking that the Bill be amended to provide an exemption from Regional Fuel Tax (RFT) for vehicles that are not used in the transport infrastructure, that is, off-road vehicles and machinery used in horticulture. It asks that there be an amendment to the Bill to provide for the creation of a simple and efficient mechanism to manage rebates for off-road, on-farm vehicles, with the actual details being set out in subordinate legislation.

“The reality is, these vehicles do not use the road system and therefore, should not be taxed to pay for the roads they do not use,” Chapman says.

“Our growers expect RFT compliance to be complicated and burdensome and therefore, costly. Any prudent business passes on costs it cannot recover to the end consumer and that, in turn, will affect the prices of fruit and vegetables. We do not believe sufficient regard has been given to equity and fairness in regard to compliance and administration costs for horticulture producers.

“Auckland-based growers will be disadvantaged if they have to absorb RFT costs for off-road vehicles and machinery and growers in other parts of New Zealand do not. 

“More generally, the focus of the Bill appears to be on revenue collection and not on road use behaviour change; we submit that tolls are more likely to change behaviour and are a more fair system, offering choice.

“We do not support RFT for all regions, noting that the Regulatory Impact Statement was done for Auckland only and that more thinking would be required on the process before this tax was extended to other regions. As a wider tax it should be considered by the Tax Working Group.

“We also do not support the process of moving decisions on regional fuel tax away from central Government to local government, thereby removing the opportunity for national consultation.

“We hope more consideration goes into this Bill before it becomes law.”