Victoria backs user-pays road tax for all motorists

Victoria is primed to become the first state or territory in Australia to scrap fixed road-user charges in favour of variable distance-based taxes, expanding the pay-per-kilometre system recently implemented for electric car owners to all motorists.

The recommendation was submitted to, and supported by, the Andrews government in the 2021 Victorian Infrastructure Plan published yesterday and could ultimately bring an end to fixed road-user fees imposed by the state government such as fuel excise.

Such a move has been encouraged by the car industry in line with the increase in sales of electric vehicles, creating a level playing field between EVs and traditional combustion-engined cars.

Currently, EV owners in Victoria are charged 2.5 cents for every kilometre travelled in lieu of not having to pay the fuel excise applied at the bowser for every other vehicle type.

This is offset by a subsidy of up to $3000 at the time of purchase for eligible electric cars (priced below $68,740).

Supported “in principle” by the Victorian government, the new road tax system would be implemented progressively by “gradually expanding and reforming the existing electric vehicle charge”.

As part of its rationale for supporting the recommendation, the Andrews government said it was considering the “long-term effects of the erosion of revenue from the fuel levy” as more vehicles become electrified.

“The introduction of distance-based charging for zero- and low-emission vehicles in Victoria is a first step in ensuring the long-term sustainability of the transport network by making sure everyone pays their fair share to build and maintain our roads,” the government said.

“The Victorian government is also currently working with its state and commonwealth counterparts to enhance the manner in which heavy vehicles (those over 4.5 tonnes) are charged for their road use.

“The government will continue to monitor the policy settings associated with road charges.”

The state government has also this week knocked back recommendations for a full-scale congestion charge in Melbourne, citing citizens’ “significantly changed travel patterns” as a result of COVID-19 and the fact that the concept does “not align with existing government policy”.