John MacDonald: Fuel tax increase needs to be back on the table

Author: John MacDonald,
Publish Date: Thu, 2 Jul 2026, 2:34pm

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Yesterday, Treasury released a whole lot of documents showing the advice it gave the Government during the early days of the fuel crisis.

One of the key things was a recommendation not to cut fuel taxes or road user charges, because it didn’t think it was needed.

The Government went with the advice. But, you might also remember, that the Government went a step further than that and said that the fuel tax increase - due to kick in at the start of next year - was unlikely.

Which I thought was a bad move. And I still do.

In the reports I’ve seen about yesterday’s document dump, there’s nothing about any Treasury advice on next year’s increase.

But there’s two reasons for that: 1. This advice was to help the Government deal with things in-the-moment. And 2. When Nicola Willis and Chris Bishop poured cold water on the fuel tax increase, that was just politics.

Because, as you’ll remember, there were all sorts of people crying out for help.

The Government went ahead with the support for low-to-middle income earners. But that was it.

And it knew it wouldn’t be a good look if it said no to everyone else wanting help and, in the same breath, said it was also going ahead with next year’s fuel tax increase.

But that was a bad move by the Government. My view on that hasn’t changed. And that’s why I think the Government needs to bite the bullet and press on with the fuel tax increase early next year. As planned.

There’ll be plenty of people who will say that they couldn’t afford fuel taxes increasing.

But I don’t think the country can afford not to increase them. And I’m not the only one.

Deputy Prime Minister David Seymour thinks the same.

He says the Government shouldn’t do anything to limit its revenue from fuel taxes because of the long-term consequences for the Government’s finances.

And what he’s talking about there, is limiting or restricting the amount of money the Government gets in to pay for road maintenance and construction.

It also helps pay for things like public transport.

The Finance Minister even acknowledged this negative impact when she said a few months back that the fuel tax increase was unlikely to go ahead.

So, in its heart of hearts, the Government knows that increasing fuel taxes is a no-brainer. Which it is.

The Government knows it. We know it. So there’s only one thing for it to do.

It needs to stop being so antsy and it needs to commit to putting the fuel taxes up, as planned, early next year.

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