Small diesels, like the go-getting Suzuki Swift, just can't get a break from the Government.

Drivers seeking a car that drank the least fuel were once forced to take the diesel route and live with the compromises - smoky exhausts, an idle that resembled a tractor's and sluggish performance.

But all that has changed. Modern petrol engines offer a reasonably frugal alternative. Hybrids boast a similar thirst to today's diesels, and those are now cleaner-burning, more refined and counter a petrol powerplant's top-end power with plentiful grunt at the speeds we normally travel at. What's not to like?

The Road User Charges system. A government-mandated spoiler, the RUC structure forces owners to pay a kilometre-based tax in advance, which is a fiddle, and is levied at a rate which penalises smaller, super-frugal diesels.

That's been proved at successive AA EnergyWise rallies. The car which required the smallest fill in 2010 was the Mini Cooper diesel, sipping 4.27l/100km for a cost at the pump of $92.34. Add $77.57 road user charges for the 1763km distance and the total was $169.92.

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So the abstemious Mini cost more to cover the distance than the petrol winner, the bigger Honda Insight drinking 4.635l/100km for a cost of $147.83, with the road user charge included in the per litre cost of the petrol.

The 2008 rally was won by a diesel, VW's Polo Bluemotion geared for cruising and drinking 3.64l/100km for a total cost, including RUC, of $130.83.

The first four cars were diesels, the fifth a Honda Civic hybrid averaging 4.765l/100km at $156.92 in total; not much more than the diesel's cost despite the fact it used over 18 litres more go-juice.

Clearly, small diesels use less fuel, which you'd think should be encouraged, not penalised.

Which brings us neatly to this week's drive - Suzuki's Swift diesel, at $25,990.

It fields a 1.3 litre engine in place of the petrol's 1.4, and with a modest 55kW at 4000rpm the 70kW petrol trounces it in power terms.

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But the diesel's 190Nm at 1750rpm blasts the petrol's 130Nm at 4000rpm into the weeds, and gives this tiny car a mighty punch at round-town revs, a punch you can make the most of given the five-speed manual transmission and Swift's deservedly renowned sweet handling.

Sure, it's a smidgen heavier than the petrol car and that weight sits up front, slightly blunting this Swift's dynamic sparkle. But that's not what puts buyers off.

Suzuki claims 4.2l/100km thirst. I thrashed the throttle and recorded a 5.0l/100km average - still less than the manual petrol's 5.5l/100km claim. But paying $48 tax per 1000km - the levy for any vehicle under 3.5 tons - puts the per kilometre cost close enough that the private buyers and small businesses which would benefit from a more frugal car will only consider the petrol.

Suzuki NZ general manager of marketing, Tom Peck, admits RUC means Swift diesel buyers won't save money, but the car is selling - to fleets and government departments with a diesel-only policy.