New Zealand Government Cancels January Fuel Tax Increase

Finance Minister Nicola Willis confirmed that the coalition government will not proceed with a planned 12-cent per litre fuel tax increase scheduled for January 1, 2027. Willis stated that the government needs to formalize the decision and reflect it in the accounts, though the move still requires formal Cabinet approval.

Simultaneously, the Labour Party pledged not to increase the fuel excise duty for a full three-year term if elected to government. Labour leader Chris Hipkins argued that New Zealanders cannot afford additional costs during a cost-of-living crisis, asserting that fuel is not a luxury.

Government ministers criticized the Labour pledge as irresponsible. Transport Minister Chris Bishop warned that ruling out increases for a full term would jeopardize funding for road maintenance and active construction projects. In response, Hipkins stated that Labour would scale its roading ambitions to fit available budgets and proposed using a small portion of the National Land Transport Fund to support public transport fare caps.