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Why are diesel cars taxed more heavily when in fact they are more economical and more environmental friendly.

Diesel cars aren't taxed any more than petrol cars. The difference is the way they pay tax. There is no tax on diesel (except GST), which is why the price of diesel is so much lower. By comparision, there is 60 cents per litre tax on petrol, not including GST. For diesel cars, most of this tax (50c) is collected by Road User Charges which is equivalent to the petrol tax. This is a road tax, not an environmental tax. But that doesn't include ACC, so diesel vehicles pay all their ACC up front in the annual vehicle re-licence fee. Petrol vehicles pay a lower licence fee because 10c per litre of petrol is an ACC levy. You can learn more about this here: http://www.aa.co.nz/motoring/aa-torque/speaking-up/fuel-taxes-fines-charges/acc/