What Luxon's fuel tax and visitor levy comments mean for you
Prime Minister Christopher Luxon has suggested two possible changes if National is re-elected: a rise to the fuel excise duty (a tax on petrol and diesel added at the pump) and a new accommodation levy on places like hotels. He made the comments during his regular weekly interview on RNZ's Morning Report on 9 August 2026. RNZ
Just days earlier, on the Sunday before, the National Party had committed to three Budget Responsibility Rules — promises to return government spending to surplus, cut debt, and keep taxes low. In the Morning Report interview, Luxon said National would not introduce new taxes like a capital gains tax, wealth tax, death tax, gift tax, income tax increases, company tax increases, or a land tax. He framed the fuel excise and accommodation levy as existing or already-signalled tools rather than brand-new taxes.
Fuel excise is a charge that has been added to petrol at the pump for decades. The money is ring-fenced, meaning it can only be spent on roads and transport. The current government has not raised the excise in its first three years in office. National campaigned in 2023 on not lifting fuel taxes at all in its first term. Transport Minister Chris Bishop said that was the right call during a cost of living crisis. RNZ
The government had planned to raise the fuel excise by 12 cents per litre from January 2027, then 6 cents per litre in 2028, and 4 cents per litre in the years after. But that plan was set before the current fuel crisis. In March 2026, the government said it may put those increases on hold while dealing with what has been described as the Iranian fuel crisis. RNZ
Luxon told Morning Report it was "highly unlikely" the planned increases would go ahead given that crisis, but said the excise would need to be lifted at some point over a second three-year term. His language has shifted over time. In late March 2026, he told TVNZ's Breakfast the January increase was "possibly unlikely." By late June, when petrol prices dropped below $3 a litre for the first time, he cautioned there was still "a long way to go" before fuel relief payments could stop. TVNZ/1News RNZ
Labour has taken a different position. In May 2026, the party announced it would scrap National's fuel excise increase entirely while fuel prices stay high and families struggle with the cost of living. Labour Party
On the accommodation levy, Luxon pointed to something the government was already planning to look into. He said National was open to exploring a levy in 2027 for cities under pressure from high tourist numbers, where visitors put strain on local infrastructure like roads and pipes. The idea lines up with work already underway. In August 2025, Transport Minister Chris Bishop outlined a new Development Levy system for funding infrastructure in a speech to the Building Nations forum, noting that most drivers currently pay for roads through the fuel excise every time they fill up. National Party
The accommodation levy idea has some backing in the hospitality sector. A New Zealand hotel operator told RNZ in August 2025 he supported a nationwide bed levy if no other way to raise the money could be found. RNZ
This is not the first time Luxon has used a media appearance to signal policy direction ahead of a formal announcement. On the Thursday before, he announced a plan to hold a referendum on MMP (New Zealand's voting system) live on Newstalk ZB, which blindsided his coalition partners and appeared to catch National colleagues off-guard. RNZ
The broader pattern here is that Luxon appears to be using broadcast interviews to test policy ideas publicly rather than going through the usual Cabinet or coalition channels. The fuel excise signal fits that pattern. The detail may be driven by the fiscal constraints National has set for itself: the three Budget Responsibility Rules commit the party to surplus and debt reduction, which means there is limited room to keep putting off revenue it had already planned to collect. Fuel excise, as Bishop noted in his Building Nations speech, is still the main way most drivers fund the roading network. Delaying the increase during a fuel crisis makes political sense in the short term, but keeping that delay going across a full second term would leave a gap in the funding for roads and transport that would need to be filled from somewhere.
Whether the accommodation levy becomes that somewhere, or stays as a targeted tool for councils with lots of tourists, will depend on coalition negotiations after the election. Luxon has now put both options into the public domain.
