Auckland's regional fuel tax is set to end at the end of June, Prime Minister Christopher Luxon announced today.
Introducing legislation to remove the tax was part of the coalition Government's 100-day plan.
Introduced in 2018, it saw Aucklanders pay additional 11.5 cents per litre tax on fuel, with a purpose to "fund transport projects that would otherwise be delayed or not funded".
But the Government has said the tax puts unnecessary extra cost on some Kiwis.
Speaking alongside Transport Minister Simeon Brown today, Luxon said: "We're announcing that Auckland's Regional Fuel Tax will end on June 30.
"We are determined to reduce the cost of living for hardworking New Zealanders and this will go some way to easing that pressure on them.
"I acknowledge that also, Auckland is facing some huge infrastructure challenges as well, but this fuel tax is actually not being used to deliver them.
"Instead it's delivered more cycle lanes, red light cameras and speed humps."
'An increasingly regressive form of taxation' - minister
Simeon Brown echoed Luxon's comments.
"Fuel tax is becoming an increasingly regressive form of taxation and costs people on lower incomes with less fuel-efficient vehicles more than those who have newer more fuel-efficient vehicles," he said.
"We intend to fully remove the legislative framework for regional fuel taxes."
However, the Government is still committed to supporting Auckland's infrastructure needs, he said.
As of September last year, about $780 million in Regional Fuel Tax (RFT) revenue had been raised with approximately $341 million remaining unspent, Simeon Brown added.
Auckland's mayor says major transport projects are now at a crossroads. (Source: 1News)
"I have discussed the unspent funds with Auckland Mayor Wayne Brown and signalled our intention that they are to be spent on projects which are of mutual priority to the Government and Auckland Council.
"Legislation removing the RFT will require Auckland Transport to only be able to use the remaining RFT revenue and unspent funds towards delivering these projects."
The money would be spent on the Eastern Busway, new trains for the Central Rail Link, and "some local roading improvements".
Among the things that wouldn't be funded were some cycleways and bus lanes.
"The Coalition Government is committed to working with Auckland Council to ensure we build the infrastructure Auckland needs, and at the same time unlock the funding and financing tools they need to help fund their share," Simeon Brown said.
Mayor Wayne Brown responds
Auckland's mayor took a different view.
He warned the move will see Aucklanders either have to pay higher rates or miss out on certain infrastructure improvements.
"This decision will have unintended consequences unless the Government is prepared to foot the bill for upcoming transport projects," the mayor said, adding the tax cut will leave a shortfall in transport funding of $1.2 billion over the next four years.
"The money set aside has been fully allocated to projects that are under construction. It just isn't spent until contractual milestones are met. That's standard practice when you're building something.
"As a direct consequence of the Government's decision to cancel the RFT, some of these projects may very well be cancelled altogether."
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