Moving Forward - Land Transport Changes 9/11

Mark Gosche Transport

Electronic Road User Charges- Fact Sheet Five

The government wants to ensure the system used for
recovering roading costs from heavy and diesel vehicles is fair and does not
impose unnecessary compliance cost on vehicle operators. An electronic system of
road user charges will enhance the efficiency and fairness of these charges.

The current paper-based system for Road User Charges (RUC), introduced in
1977, is a weight-distance tax that uses vehicle distance measuring devices
(odometers and hubodometers). Charges are based on the average cost of the
roading system. Charges are also based on vehicles' average rather than actual

This system is inefficient and imposes high compliance costs on users. It
also requires substantial ongoing enforcement and a national network of agencies
issuing licences. Non-compliance is currently estimated to cost the country
about $28 million (including GST) per year, representing some four per cent of
the total net RUC revenue.

An electronic system, called e-RUC, will offer a fairer and more accurate
means of charging heavy and diesel vehicles. It should also mean savings for
many businesses.

E-RUC will be introduced on a voluntary basis and, initially, RUC vehicle
operators will have the choice of moving to e-RUC or continuing to operate under
the existing system. Over time it is expected that the majority of heavy and
diesel vehicles will switch to e-RUC.

Legislation is needed to implement e-RUC and to ensure privacy is protected.