New Zealand drivers are unlikely to escape a fuel excise increase indefinitely, with Prime Minister Christopher Luxon signalling the Government expects to raise the tax at some point during its second term if re-elected.

Luxon told Newstalk ZB the Government is unlikely to proceed with the legislated fuel excise increase scheduled for January 1, but argued an increase will eventually be needed to help fund the country’s road programme.

“We’ll probably delay that, but somewhere in that (second) term we’ll have to deal with increasing fuel excise just because that’s actually how we fund the road programs,” Luxon said.

The Prime Minister said fuel excise has not increased since 2020, with the Government deliberately holding it because of cost-of-living pressures.

“We’ve actually not increased it since 2020, and we made a conscious choice not to do it in the first three years because we said, look, cost of living [is] challenging for people.”

Luxon’s comments come after Finance Minister Nicola Willis said over the weekend there would be “no new taxes on working people” as National unveiled its Budget Responsibility Rules.

Pushed on the party’s future tax plans, Willis said New Zealanders could expect “no new taxes on their work, their savings, their investments or their capital”, with National’s detailed tax policies to be released over the course of the election campaign.

Luxon, however, has now identified fuel excise as one measure the Government could use to raise additional revenue.

“You’ve heard us say actually it’s highly unlikely we’ll actually go back to the legislative increases that we are legislated to do under legislation on the first of January,” he said. “We’ll probably delay that.”

Rater than being a new tax, Luxon said the fuel excise tax was an "existing policy" and "a long-standing levy that's been applied when you fill up at the tank, that's been in place for decades."

The comments stop short of confirming the January increase has been cancelled, but indicate the Government currently considers it unlikely to proceed.

The Prime Minister later confirmed fuel excise was among three new potential revenue measures being considered, alongside an accommodation levy and proposed bank tax.

In New Zealand, petrol drivers pay roughly 70 cents per litre in Fuel Excise Duty (FED) at the pump, which goes into the ⁠National Land Transport Fund to pay for road building and maintenance. Total national taxes and levies on unleaded petrol add up to about 77.2 cents per litre.

The Government’s Budget 2026 forecasts a return to surplus in 2028/29, supported by a combination of higher tax revenue, spending controls, capital investment changes and lower borrowing and debt-servicing costs.

Fuel excise is particularly significant for motorists because it is directly linked to funding the country’s transport system.

The Government is also expected to introduce road-user charges for all light motor vehicles, further changing how motorists contribute towards road funding.

Legislation passed in May under the Regulatory Systems (Transport) Amendment Act also allows the introduction of digital driver's licences, while also enabling electronic alternatives to physical Warrant of Fitness (WoF) and vehicle registration labels.

For now, however, there is no indication from Luxon of how much fuel excise could increase by or exactly when it would happen.

Fuel excise tax increase likely if National re-elected, says Luxon

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