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The death of a tax

Today's newspapers are running hot with news that at least 14 councils around NZ are thinking of following Auckland by adding a tax to transport fuels.

I guess these councils think that this is a great, easy and undodgeable way for them to squeeze a little more blood out of the stone that is the ratepayer and in a way that, within a few months, nobody will really notice.

Of course tax on fuel is nothing new... a large component of NZ's petrol price are the taxes (and taxes on taxes) that central government has applied in order to fund the nation's roading network.

If you drive a diesel, the effect of the tax is more obvious as you are required to pay Road User Charges (RUC) based on the number of Kms traveled.

But let's talk about the effect that EVs will have on this long-standing tax-take.

The simplest way to stop EVs from avoiding fuel tax is to treat them like diesels and charge RUC based on their odometer readings.

No doubt this will initially involve displaying an RUC certificate on the windscreen of the vehicle that can be compared to the odometer reading next time you're assumed to be guilty of infringing the rules and thus stopped at a "papers please" checkpoint on one of our roads.

However, it's only a matter of time perhaps, before a ubiquitous standard for charging RUC at the time of recharging becomes the norm. Plug in to a charger and the total cost of your charge will include a "per Km" charge based on the readings your car's onboard computer provides to the recharger.

Of course in the mean-time the problem of levying tax on plug-in hybrid vehicles suddenly becomes rather tricky since if you charge them RUC then they're paying twice when they're being run on petrol -- and if you don't charge RUC then they could effectively avoid the taxes completely by being used as a short-haul "electric only" vehicle which never burns a drop of petrol.

The real question will be however, what do local councils do when most people are driving EVs?

A proliferation of EVs means that regional fuel tax revenues will fall significantly won't it?

Ah, but hang on, we're being told that these are "temporary" taxes and not intended for long-term revenue collection.

Cue Tui's ad.

Governments (be they central or regional) are very, very reluctant to remove taxes once they are imposed and I don't see why these regional fuel taxes would be any different. Having weathered the storms of public opinion to get them instated in the first place, I find it hard to believe that the regional authorities involved will soon grow fatter and lazier, increasingly reliant on this delightfully simple revenue stream. So how will they cope when it fizzles out?

Might the next step be a regional government levy on your power bill?

An extra two or three cents per unit perhaps? Going straight into the local council's coffers -- so they can afford *real* cream on their donuts rather than the mock cream that they are currently forced to endure at ratepayers' expense.

Of course we'll be told that this is a great way to keep rates to a minimum but despite such assurances, the rates bill will also continue to climb, probably outpacing inflation as it has done for so many years now.

So what happens then, when people start switching to self-generated renewable energy through on-roof PVAs and the like? How will the local bodies make up (once again) for the lost revenues that advancing technology has produced?

Well instead of a single resource consent for your rooftop PVA, you'll probably have to pay an annual fee for the privilege of powering your own home from the sun.

As a wise man once said, there are only three sure things in this world:

1. death
2. taxes
3. idiots in positions of power

Actually, I added that last one myself :-) But am I wrong?

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