(Bloomberg) -- New Zealand is temporarily reducing fuel taxes to temper gasoline prices that have soared after Russia's invasion of Ukraine.
The government will cut fuel excise duties by 25 New Zealand cents a liter for a period of at least three months, effective from tonight, Prime Minister Jacinda Ardern told a news conference in Wellington on Monday. It will reduce road user charges for diesel vehicles by the same amount, and also halve public transport fares from April 1, she said.
“We cannot control the war in Ukraine nor the continued volatility of fuel prices but we can take steps to reduce the impact on New Zealand families,” Ardern said. “The global energy crisis has quickly become acute, which is why the government has stepped in.”
New Zealand prices for regular gasoline have surged above NZ$3.20 a liter, the equivalent of $8.21 a gallon in the U.S. Ardern said the cut in fuel tax would reduce the cost of filling up a 40-liter tank by about NZ$11 and a 60-liter tank by about NZ$17.
The policy is estimated to cost about NZ$350 million ($237 million), which will be re-prioritized from other spending and won't require increased borrowing, Finance Minister Grant Robertson said.
“We do need to recognize that petrol prices are expected to continue to rise,” he said. “The Russian invasion of Ukraine is continuing to undermine and destabilize global energy markets and, added to the other inflationary pressures the world has due to Covid supply chain disruptions, this is sadly not over yet.”
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