Calls for EV road tax to be introduced across Australia

The Australian Automobile Association (AAA) has again backed calls for a new road-user tax to be introduced for electric vehicles, claiming that EV drivers aren’t paying their fair share alongside petrol and diesel motorists.

At present, the large majority of Australian motorists help fund the road network by footing a fuel excise that amounts to about 42.3 cents in every litre of petrol or diesel sold.

The excise, along with registration, stamp duty, road tolls and other measures, helps fund huge road infrastructure projects on a federal and state basis.

However, EV buyers currently do not contribute because they draw their 'fuel' from the electricity grid.

Today, a new draft report has recommended that a national model be introduced to bring EVs into a road-user charging system. The draft Report of the Review of Federal Financial Relations was chaired by businessman and former Telstra chief executive, David Thodey.

The AAA has tentatively welcomed the move, so long EVs are taxed at a lower rate and the funds are used to encourage green vehicle technologies and infrastructure.

“The AAA advocates that EVs are brought into the tax system at a discounted rate to avoid disincentivising their take-up,” said AAA managing director Michael Bradley.

“We also ask government to consider apportioning revenue from EV road-user charging to future government programs that incentivise development and roll-out of ultra-low fuel consumption technologies and infrastructure, such as charging stations.

“Ultimately, with declining revenues from fuel excise, there will need to be broader reform of road-user charging models. This has also been recognised in today’s report which is also welcomed by the AAA.

“We see a terrific future for all forms of ultra-low fuel consumption technologies. But we also know that motoring taxes need to be both fair and sustainable into the future, with everyone paying their way,” Bradley concluded.

The NSW government is already examining the potential for a road-user tax for EV drivers that would eventually be adapted to all road users as fuel excise revenue shrinks.

“Odometer readings reported annually or biannually can be used to calculate the charge. These readings can be automatically submitted by vehicles, where possible, or self-reported (with photographic evidence),” reads a recent draft NSW Treasury report.

So far this year, electric and hybrid cars accounted for just 2 per cent of all new vehicles sold in Australia.

The news comes as the federal government adjusted the thresholds for the much-maligned Luxury Car Tax for the 2020-2021 financial year.

As of yesterday (July 1), the LCT-free threshold increases to $68,740 (up from $67,525) for ordinary vehicles and to $77,565 (up from $75,526) for ‘efficient vehicles’ with fuel consumption of less than 7.0L/100km.

Buyers of vehicles priced above those thresholds must pay an extra 33 cents for every dollar above the threshold.

It marks the first time in five years the threshold has been adjusted for ‘efficient vehicles’ and the first time in a decade the LCT threshold for green vehicles has increased more than for other vehicles.