Fuel prices will drop from 11.59 pm tonight after the government announced a temporary reduction in the fuel excise tax.
Excise duty will reduce by 25 cents per litre. Road user charges will also drop by the same amount.
All public transport fares will be slashed by 50 per cent. This is likely to kick in from April 1.
These measures are in place for three months.
It’s expected the tax cuts will save Kiwi motorists between “$11 and $17” for a full tank.
Prime Minister Jacinda Ardern announced Cabinet’s decision on Monday afternoon at a national press conference.
Ardern described the rising fuel prices as a “global energy crisis.”
“We absolutely have to alleviate the pressures that some families are feeling now,” Ardern said.
“The reduction is us making sure we are responding quickly to the pain at the pump.”
Fuel prices recently exceeded $3.00 a litre for most grades of fuel around the country. Premium octane fuels, like 95 and 98, are currently going for above $3.50 at some stations.
Ardern could not give a timeline for how long petrol prices may still be high. She said it could continue for “a while.”
Deputy Prime Minister Grant Robertson says cutting back some degree of tax is the government’s best and immediate solution to rising prices.
He said the government cannot dictate the international price of crude oil, so reducing tax is “the quickest way to help Kiwis.”
Robertson added the government would not consider reducing more tax if the energy crisis sustains.
However, he said he is open to extending the tax cut beyond three months.
‘Most’ fuel companies are said to have agreed to lower their prices at midnight. The government did not elaborate on who was not.
Minister of Energy and Resources, Megan Woods, guaranteed all fuel retailers will play ball with the changes.
“Petrol companies are well used to changing prices,” she said.
Woods said retailers will not continue to charge high prices as a way to scoop up larger profit margins.
The 25 cent cut is on the fuel excise duty. It is not on GST.
Robertson says this makes the effect more immediate.
“It means that we can take this action within hours,” Robertson said.
The government collects 77 cents for every every litre sold. On top of that is GST and, if you live in Auckland, a regional tax.
Despite the changes, Aucklanders will still have to pay the 11.5 cent regional tax on every litre of fuel.
The Motor Trade Association (MTA) praised the announcement as a “win-win” for Kiwis.
“The only winner out of recent price hikes has been the Government,” the Association said.
“It’s only appropriate the Government is the one to take a cut in revenue. Essentially, that’s what many Kiwis have experienced.”