Victoria joins other states with EV tax plan

Victoria has become the third state this month to confirm a plan to hit electric vehicles with a road user tax.

Following similar moves announced by South Australia and New South Wales over the past two weeks, Victorian treasurer Tim Pallas foreshadowed the measure that will be included in Tuesday’s state budget.

It has been met with widespread opposition, including from the Federal Chamber of Automotive Industries (FCAI) – the peak body representing the car-makers – which claimed the Victorian government was “trying to ‘kill’ EV use”.

The road tax is estimated by the Victorian government to add “on average” between $260 and $300 to the cost of a plug-in electric vehicle.

It has been introduced because those vehicles contribute reduced or no revenue via fuel excise, a national tax forecast to generate about $50 billion over the next four years.

The Victorian road tax will be charged at 2.5c per kilometre for EVs and 2.0c per kilometre for plug-in hybrid electric vehicles (PHEVs).

In South Australia, treasure Rob Lucas described road charges for plug-in electric vehicles as a “no brainer”.

The move could yet be defeated in parliament by a coalition of the Labor opposition and minor parties including the Greens.

In NSW, the state government has toned down expectations in the past few days after copping criticism on a variety of fronts when it revealed that it, too, had plans to introduce road user charging for EVs.

The move to a road tax-based system for all vehicles has been widely recognised as logical as fuel excise revenue diminishes, but the South Australian and Victorian decisions are drawing criticism because EVs are being specifically targeted.

Neither state offers substantive incentives to make the transition away from fossil-fuelled vehicles to EVs.

Pallas argued the $30 million over four years – not one year as mistakenly stated during a press conference – that is estimated to be generated by the EV road tax would be counterbalanced by $45 million being spent to boost charging infrastructure.

He also stated the road tax was important because it meant plug-in vehicles would contribute to maintaining road systems.

However, this is a misleading statement as at least half of fuel excise goes into general revenue rather than a specific road maintenance fund.

“This new tax is built on a myth. Fuel excise income is not quarantined for roads and will drop in the long run,” said Electric Vehicle Council boss Behyad Jafarai.

“But as we shift away from petrol and diesel, diseases linked to air pollution and other costs associated with climate change will also decrease.

“Why would you tax a technology that will drive profound savings and economic benefit? Now is the time to be encouraging EVs, not holding them back with a new tax.”

FCAI chief executive Tony Weber added: “Once again, we have a state government in Australia trying to destroy the path to a greener and cleaner motor vehicle fleet for this and future generations.

“Don’t worry about health outcomes, don’t concern yourself about the environment – short-term revenue collection comes first.

“Other countries bend over backwards to increase the use of EVs and other low-emission vehicles, because they recognise the benefits.

“Australian state governments want to kill the technology at its infancy. Is this because some states want to substitute the Commonwealth excise tax with their own tax? Are motorists being caught in a petty game in which the states want to establish a new revenue base at the expense of the Commonwealth?

“The FCAI recognises that the decline in excise, the taxation of motorists and their vehicles, is a long-term issue that needs to be addressed. We also understand that road user charging may play a role in Australia’s future tax regime.

“However, such a transition needs to be undertaken in a holistic and nationwide manner, recognising the importance of EVs and other low-emission vehicles. Let’s not kill EVs in their infancy.”

Not all groups are opposed to the moves by the state governments.

Infrastructure Partnerships Australia (IPA), an organisation that includes toll road operator Transurban among its membership, was welcoming.

“At its heart, this reform is about fairness. It’s not fair that right now a family in a Mazda or Kia is paying to use the roads while a millionaire in an electric Tesla, Porsche or Jaguar gets a free ride,” said IPA CEO Adrian Dwyer.

“Other countries and states around the world, including New Zealand, California, South Australia, Oregon and Utah have already moved to introduce comparable mechanisms and pilots to help future-proof the way they pay for road building and maintenance.

“Applying a simple distance-based charge on electric vehicles will ensure every motorist makes a fair and sustainable contribution and will help secure a vital stream of transport funding for generations to come.

“While a shift to electric vehicles could deliver many environmental and health benefits, they don’t levitate, and should be paying to use the roads like everyone else.”

Meanwhile, the Australian Automobile Association (AAA), the peak body of motoring associations such as the NRMA and RACV, called for the federal government to take the lead on road charging.

“The federal government must step in and ensure tax changes are nationally consistent, equitable, and progressed in a manner that does not disincentivise technological transition,” said AAA managing director Michael Bradley.