The petrol tax cut, the equivalent cut in road user rights and half the price of public transport were due to end next month, but have all now been extended until the end of January.
The decision was announced today by Treasury Secretary Grant Robertson, Energy Secretary Megan Woods and Transport Secretary Michael Wood.
Treasury estimates it will cut headline inflation by 0.5 percentage points in the June quarter.
Robertson said the tax cut would cut the cost of filling a 40-gallon tank of gasoline by more than $11, while public transportation at half the price would save the average user $25 a week.
The cuts were announced in March as global oil prices skyrocketed and were initially planned for three months before being extended in the budget. They were supposed to end on August 15.
Wood said that since the introduction of the half-price in April, use of public transport has increased in Auckland, Wellington and Christchurch.
She said that because half-price public transportation is now available until the end of January, the Community Connect scheme will now start in February.
“This will also give local authorities more time to set up the systems needed to efficiently manage the Community Connect scheme, giving people with a Community Service Card free public transportation.”
Earlier this week, a chief policy adviser for the Automobile Association, Terry Collins, said there would be an “inevitable rush” when the additional 25-cent tax came back.
“This must be a difficult thing for the government – if it goes through in one go, we can expect queues at the petrol stations, and we expect some of them to be dry,” he said.
“It’s hard for those oil companies to fill them up” [pumps] because they only have a limited number of trucks and tankers to do that, and if it happened nationwide it would put a strain on their logistics.”
The price of Brent crude fell below $100 a barrel for the first time in three months.