Government cancels 2027 fuel tax increase, introduces price increase scheme

The National-led New Zealand government has today announced that the planned fuel tax increase in 2027 will not go ahead. 

The announcement concerns the 12 cent-per-litre increase that was set to come into action on January 1, 2027. 

The equivalent increase to the price of road user charges has also been shelved for the time being. 

With the announcement of this cancellation, the next planned fuel tax increase of five cents will be actioned on January 1. 2028. 

These announcements were made by Prime Minister Christopher Luxon and Transport Minister Chris Bishop at a press conference this afternoon. 

“Cancelling next year’s fuel excise increase and spreading the change over time from 2028 will give Kiwis more time to recover from the period of post-Covid economic pain and recent uncertainty in the Middle East,” said Finance Minister Nicola Willis.

While these cancelled tax increases will bring Kiwis financial relief in the short term, they arrive alongside an announcement of a new scheme. 

Following the five cent fuel tax rise in January 2028, the government plans to increase it by the same amount in three six-month intervals. 

“We will not be increasing fuel tax on the first of January next year. We just need to formalise that decision and reflect it in the government accounts,” Willis added.

Labour has responded to this announcement by calling for the government to scrap these tax hikes entirely. 

“Kiwis should not be hit with higher fuel costs because this Government refuses to rule out a tax grab,” said Labour’s transport spokesman Tangi Utikere.

This announcement comes days after Labour ruled out any sort of fuel tax rise entirely over the next three years. 

“When families are already paying more at the pump, the last thing they need is Christopher Luxon and National reaching into their pockets for more,” said Labour party leader Chris Hipkins. 

With the election date of November looming, both parties have taken to using this fuel tax as a bargaining tool, hoping to sway voters with these announcements.