New Zealand has a unique approach to diesel taxation, largely influenced by our farming community. In a country where modern farming heavily relies on diesel, most farm vehicles rarely, if ever, drive on public roads. Recognizing this, New Zealand decided years ago to remove the road tax from diesel, selling it simply as a fuel for agricultural use. Trucks and other vehicles that do use diesel on roads are subject to road user charges (RUCs) instead.
The RUC system is based on the size, weight, and the number of wheels of the vehicle in contact with the road. In the 1990s, diesel cars were rare but started becoming more popular, especially with the influx of Japanese imports. Major Japanese brands generally sold diesel models, which became popular in New Zealand for taxis and courier vehicles. At the time, diesel was priced around 50 cents a liter, making these cars an economical choice despite being subject to RUCs.
However, the enforcement of RUCs for cars relied on the vehicle’s odometer, which was easy to tamper with before 2000. Many vehicles had simple mechanical odometers that could be disconnected or manipulated with basic tools. This led to the phenomenon of “switching” vehicles, where drivers would disable the odometer on open roads to avoid accumulating chargeable kilometers, turning it back on only when necessary.
As technology advanced, tampering with odometers became more difficult. Modern vehicles use electronic odometers stored in EPROM, making it harder to roll back the mileage. Despite this, mechanics have always had the ability to adjust odometers, usually for legitimate reasons such as replacing a faulty instrument cluster. This process typically involved technical knowledge and was not a common method of tax evasion.
However, the rise of online marketplaces like Temu and AliExpress has changed the landscape. These platforms sell rollback scanners for around $160, allowing users to easily roll back the odometer. Given that it costs about $700 to buy 5,000 kilometers worth of RUCs, purchasing a rollback scanner becomes a cost-effective way to evade these charges.
The only official mileage records are taken during vehicle inspections or when re-registering a vehicle, creating opportunities for some New Zealanders to exploit this loophole. With the government considering implementing RUCs for petrol cars as well, the practice of rolling back odometers, while illegal, might also be seen as a form of protest against perceived invasions of privacy and freedom.
The potential for widespread use of rollback tools poses a significant challenge to the government. Installing hub-mounted odometers on cars, similar to those used on trucks, is impractical due to modern alloy wheels and the complexity of such installations. This situation could lead to a substantial loss of tax revenue as more people opt to manipulate their odometers.
In conclusion, the efficiency of diesel cars means that RUCs often exceed the actual cost of fuel, incentivizing the use of rollback scanners. As the government grapples with this issue, it remains to be seen how they will address the growing problem of odometer fraud without alienating the public or appearing ineffective.