The Victorian Government wants to apply a road usage charge to electric cars because they avoid fuel excise. Key industry players have stepped up their fight, expressing their opposition in an open letter published today.


An electric-car lobby group – including automotive giants Volkswagen and Hyundai – has launched a fresh attack on the Victorian Government’s plan to introduce a special tax on electric vehicles.

The Electric Vehicle Council and two dozen other interested parties – such as Uber, Jet Charge and Doctors for the Environment Australia – have published a full page advertisement in The Age newspaper today calling on the Victorian parliament to vote against the proposed electric vehicle tax, which is due to come into force from 1 July 2021.

The Victorian Government wants to make up for a forecast shortfall in tax revenue because electric cars avoid paying fuel excise – a large portion of which goes towards funding roads.

Federal Budget figures show Australian motorists pay up to $20 billion a year in fuel excise, about a quarter of which is funnelled back into road transport infrastructure.

If the proposal is approved, owners of electric cars registered in the state of Victoria would pay 2.5 cents per kilometre or about $375 per year based on the national annual average distance travelled of 15,000km.

The 2.5 cents per kilometre charge would be in addition to the standard registration fee applicable to all motor vehicles. Owners of such vehicles would be compelled to keep a log book or a record of their car’s mileage and may be randomly audited – and could be fined for failing to keep an accurate record of distance travelled.

Plug-in hybrid vehicles would be charged 2 cents per kilometre under the proposal, even though it is impossible to independently verify when such vehicles are driven on petrol or electric power.

Plug-in hybrid cars car typically travel up to 50km before the petrol engine takes over to increase driving range to about 400km, meaning they are slugged at the bowser as well.

The Electric Vehicle Council claims Victoria is attempting to impose “the only stand-alone electric vehicle tax in the world”.

“Victoria is already massively behind comparable jurisdictions in the US, the UK, and across Europe in terms of electric car uptake. This tax will exacerbate the yawning gap,” Behyad Jafari, CEO of the Electric Vehicle Council, said in a media statement.

Mr Jafari told CarAdvice the electric car lobby group was not opposed to distance-based road-user charging – as the revenue from fuel excise diminishes as more cars switch to alternate power – but the Victorian Government proposal “is just too soon”.

“These proposed measures are premature,” said Mr Jafari. “We’re not ruling out a road-user charge for motor vehicles in the long run, but doing this now is just way too early.”

The Australian Automobile Association (AAA) – which represents 8.5 million members from motoring clubs such as the NRMA, RACV, RACQ, RAA, RAC, RACT and the AANT – said a “new charging regime for zero and low emission vehicles is another step in the right direction”.

However, the AAA said, Australia needs a national rather than a state-by-state approach.

The Victorian Government announced its electric-car tax proposal in late 2020, ahead of a planned introduction from 1 July 2021.

The NSW Government initially said it too would explore such a charge, but it has since backed down pending further analysis.

Other states and territories have also pumped the brakes on a special electric-car tax until they can get a better grasp on the complexities (see the state-by-state breakout at the bottom of this story).

After the Victorian Government announced its electric-car tax proposal late last year, the AAA’s managing director Michael Bradley said in a media statement: “The technological shifts we’re seeing in the car market are good for consumers and the environment, but they are also going to significantly undermine the federal budget and its reliance on fuel excise revenue to fund transport projects.”

“The Federal Government must step in and ensure tax changes are nationally consistent, equitable, and progressed in a manner that does not (discourage) technological transition,” said Mr Bradley.

Other members of the electric-car lobby group who contributed to the funding of the open letter in The Age today also weighed in on the debate.

“The Victorian Government is helping households install cleaner solar energy, and they should be leading the charge and making it easier for Victorians to invest in cleaner transport,” said Ellen Roberts, National Director of Solar Citizens, in a media statement.

“Just like rooftop solar, we want to see electric vehicles become more affordable for everyday Australians. But this tax on cleaner vehicles will just jam on the handbrake.”

Richie Merzian, the climate and energy program director at the Australia Institute, said in a media statement: “Penalising electric car owners because they don’t consume petrol that pollutes the atmosphere and our environment is absurd. If the (Victorian) Government is looking to increase revenue, there are far better ways to go about it that don’t disincentivise the use of electric vehicles.”

Mr Merzian also said it was “somewhat disingenuous” to suggest that roads are funded by fuel excise because “those funds collected by the Federal Government (go) towards general revenue”.

However, the most recent federal budget documents show about 22 cents from every dollar raised from fuel excise are directly funnelled back into the nation’s roads.

Electric car tax: Each jurisdiction’s current position on distance-based road user charges

New South Wales

After the Victorian electric-car tax proposal was announced in late 2020, the NSW Treasurer initially said he would consider it. However, NSW Treasury and the NSW Treasurer are now assessing the impacts of an electric vehicle road-user charge.

NSW Environment Minister Matt Kean, told The Sydney Morning Herald in March 2021 such a charge “should not be introduced until they make up a substantial proportion of the national fleet.”

NSW Transport Minister Andrew Constance told The Sydney Morning Herald in November 2020: “We should be incentivising the uptake of these things and not go straight into a conversation about tax … I don’t want to see the state be criticised the same way Victoria and South Australia have been.”

Queensland

Queensland Transport Minister Mark Bailey told Brisbane Times in November 2020 that Victoria and South Australia have “got the timing wrong” on introducing a special tax on electric vehicles and ruled out a similar scheme in Queensland for the short term.

Northern Territory

In a letter to the Federal Senate Economics Legislation Committee in February 2021, NT Chief Minister Michael Gunner wrote: “With the low uptake of (electric vehicles) in the Territory presently, there is no consideration to implement an (electric vehicle) road user charge.”

South Australia

In late 2020, the South Australian government announced it was planning to introduce an electric vehicle road user charge. However in March 2021 it put those plans on hold for a year or until after the next state election. The Electric Vehicle Council claims the majority of the upper house in the current South Australian parliament has opposed the bill and stated it would vote it down. ABC News has reported that the South Australian government is now assessing the impacts of an electric vehicle road user tax.

Australian Capital Territory

The Chief Minister for the Australian Capital Territory told The Driven in November 2020 the jurisdiction is considering an electric vehicle road user charge – and an opt-in scheme for all vehicles that could replace registration costs.

Western Australia and Tasmania

In March 2021, The New Daily reported the Tasmanian government said a road user charge for electric cars was “definitely not on our radar”, and a representative for the Western Australian government said it “does not propose the introduction of any road user charge for electric vehicles”.


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