Luxon signals fuel excise rise and accommodation levy could follow re-election
Prime Minister Christopher Luxon has suggested a rise to the fuel excise duty and a new accommodation levy could be on the table if National is re-elected, in comments made during his regular weekly interview on RNZ's Morning Report on 9 August 2026. RNZ
The remarks came just days after the National Party committed, on the preceding Sunday, to three Budget Responsibility Rules — commitments aimed at returning to surplus, cutting debt and keeping taxes low. Luxon used the Morning Report interview to distinguish those fiscal anchors from the levies he is now floating, saying National would not introduce proposed opposition taxes such as a capital gains tax, wealth tax, death tax, gift tax, income tax increases, company tax increases, or a land tax. Fuel excise and an accommodation levy, by contrast, were framed as existing or already-signalled mechanisms rather than new tax instruments.
Luxon described the fuel excise as a long-standing levy applied at the pump that has been in place for decades, with the revenue ring-fenced for road funding. The current government has not raised the excise over its first three years in office. National campaigned in 2023 on not lifting fuel taxes at all in its first term, a position Transport Minister Chris Bishop maintained was the right call during a cost of living crisis. RNZ
The government had planned a 12 cents per litre increase to the fuel excise duty from January 2027, followed by a 6 cents per litre rise in 2028 and 4 cents per litre in subsequent years. That trajectory was signalled well before the current fuel crisis, and the political ground has shifted considerably since. In March 2026, the government flagged it may put the planned 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 excise increases would proceed given that crisis, but acknowledged fuel excise would need to be lifted at some point over a second three-year term. The language marks a shift from earlier positioning. In late March 2026, Luxon told TVNZ's Breakfast that the scheduled January increase was "possibly unlikely." By late June, as petrol prices dropped below the $3 mark for the first time, he cautioned there was still "a long way to go" before fuel relief payments could cease. TVNZ/1News RNZ
The Opposition has staked out different ground. In May 2026, Labour announced it would scrap National's fuel excise increase entirely while fuel prices remain high and families struggle with the cost of living. Labour Party
On the accommodation levy, Luxon pointed to a mechanism the government was already due to explore and had included in its regional deal with Auckland. He said National was open to exploring a levy in 2027 with cities under pressure from high tourist numbers drawing on local infrastructure. The proposal aligns with work already underway in the transport and infrastructure space. In August 2025, Transport Minister Chris Bishop outlined a new Development Levy system for infrastructure funding in a speech to the Building Nations forum, noting that most drivers currently contribute to road funding through the fuel excise duty every time they buy petrol. National Party
The accommodation levy concept has some support within the hospitality sector. A New Zealand hotel operator told RNZ in August 2025 he was in favour of a nationwide bed levy if no alternative revenue-generating options were found. RNZ
Luxon's comments on fuel excise and the accommodation levy are not the first time in recent weeks he has used a media appearance to signal policy direction ahead of a formal announcement. On the preceding Thursday, he announced a plan to hold a referendum on MMP live on Newstalk ZB, a move that blindsided his coalition partners and appeared to catch National colleagues off-guard. RNZ
The broader context here is that Luxon appears to be testing policy contours through broadcast media interviews rather than through Cabinet processes or coalition channels, and the fuel excise signal is no exception. The substance may be shaped by the fiscal constraints National has set for itself: the three Budget Responsibility Rules commit the party to surplus and debt reduction, which narrows the room for forgoing scheduled revenue streams indefinitely. Fuel excise, as Bishop noted in his Building Nations speech, remains the primary mechanism by which most drivers fund the roading network. Deferring its increase during a fuel crisis is politically defensible in the short term; sustaining that deferral across a full second term would leave a gap in the National Land Transport Programme's revenue base that would need to be filled from somewhere.
Whether the accommodation levy becomes that somewhere, or remains a targeted tool for tourist-heavy councils, will depend on the shape of any coalition negotiations after the election. Luxon has now put both options into the public domain.
