Labour rules out increase in fuel excise tax if elected in November's election, government says it won't go ahead with 2027 raise

Labour will not increase fuel excise for three years if elected, leader Chris Hipkins says, as the Coalition Government confirms the 2027 increase will not go ahead.

 Following Labour's announcement Finance Minister Nicola Willis said it was good to see Labour coming around to a position thae Government had "made quite clear for some time, ... for several months ... which is that we will not be increasing fuel tax on the 1st of January next year."

"We just need to formalise that decision."

However, two-days ago, Transport Minister Chris Bishop - who had signalled for months the increase was unlikely to go ahead - said it was an "outstanding issue about what we do with the 1st of January 2027 fuel tax increases, and when I've got a decision about that, I'll announce it."

Bishop said the Government were working through exactly what the consequences were of halting the increase.

"It has fiscal impacts, obviously. The world's a volatile place. Petrol prices bouncing around, and you know every day you wake up and turn on the news, and there's a new bit of news out of the Middle East," Bishop said.

"Any deferral or cancellation of a fuel tax increase - not announcing that's what we're doing, but I'm just saying - any decision around that has a fiscal impact, so we've got to work that through. We're responsible managers of the Crown books..."

Bishop said it needed to be done before the Pre-Election Economic and Fiscal Update on September 29. 

On Labour's three year promise, Willis said Hipkins "has a multi-billion-dollar gap between his stated revenue intentions and the taxes he has so far outlined."

Labour to 'hit pause immediately'

Hipkins on Tuesday said Labour would hit pause on the 2027 increase "immediately."

"Increasing fuel taxes in the middle of a cost of living crisis when fuel is going up because of international pressure would be an irresponsible thing for the government to do."

“Fuel is not a luxury," Hipkins said. "People need it to get to work, get their kids to school, run their businesses and get around their communities."

A question mark had been over the 2027 increase since March following the war in the Middle East.

In April, Bishop said it was unlikely to go ahead, but that there were a "range of things to do before we make that final decision."

“There are implications from delaying the increase to fuel tax by another year, it's not just new roads, it's existing road maintenance funding and public transport, for example, all of the things that that fuel taxes go towards."