Proposal for Electric Vehicle Owners to Pay a Road Tax before the Upcoming Economic Meeting
In a move aimed at ensuring fair contribution to road maintenance, the Australian government is considering a road user tax for electric vehicle (EV) drivers. The proposed tax, which is yet to be finalized, would supplement the existing fuel excise revenue from petrol and diesel vehicles.
The rationale behind this tax arises due to the current lack of contribution from EV drivers to fuel excise, a major source of federal funding (approximately A$16 billion per year) for road maintenance and infrastructure. The proposed distance-based charge for EVs aims to address the shortfall in road funding as more drivers switch from fossil fuel vehicles to electric.
The federal government, led by Treasurer Jim Chalmers and Transport Minister Catherine King, acknowledges the need for such a tax. According to reports, the tax concept was mentioned by Chalmers in a speech in June. Notably, New Zealand already has a road-user charging system for electric vehicles, with petrol cars soon to be added to the tax.
The proposed tax rates for battery EVs and plug-in hybrids are around 2.974 Australian cents per kilometer and 2.379 cents per kilometer respectively, and these rates are expected to be indexed annually to inflation.
The idea of a road user tax for EV drivers has sparked some controversy, partly due to debates about EVs' environmental benefits and claims that EVs cause significant road wear because of their weight. However, EV advocates argue that electric vehicles cost less to run, cut emissions, and reduce reliance on foreign oil.
Frontbencher Tanya Plibersek supports the idea, stating it's sensible for states and territories to consider long-term solutions for road maintenance. Coalition senator Jane Hume advocates for a broader road tax to address ailing roads. The Electric Vehicle Council supports fair road user charges, but they should not hinder the shift to clean transport.
The states and territories have been looking at this issue for some time. In 2023, Victoria attempted to implement a two cent per kilometre charge on EV users, but the proposal was overruled by the High Court. The discussion on this issue is set to continue, with the road tax idea scheduled for further discussion among federal and state ministers.
In a positive light, EV industry leaders such as EVC chief executive Julie Delvecchio state that reforms should encourage the adoption of electric vehicles. Delvecchio notes that electric vehicles improve the air quality and support the energy system. She adds that reforms to fuel excise should drive Australians toward electric vehicles.
As the number of petrol and diesel vehicles decreases, less money will be generated from fuel excise, potentially affecting road maintenance. This proposed tax aims to ensure that electric vehicle drivers contribute fairly to road upkeep funding, which currently depends heavily on fuel excise paid by gasoline and diesel vehicle users.
The roundtable next week will discuss this issue further, with transport industry leaders gathering to discuss the proposed road user tax for EV drivers. The federal government is yet to finalize the timeline or model for this tax, but it is clear that the future of road funding in Australia is undergoing significant change.
[1] ABC News Australia (2023). Australia considers road tax for electric car drivers. Retrieved from https://www.abc.net.au/news/2023-06-01/australia-considers-road-tax-for-electric-car-drivers/131996684
[2] The Sydney Morning Herald (2023). Electric vehicle road tax: what you need to know. Retrieved from https://www.smh.com.au/national/electric-vehicle-road-tax-what-you-need-to-know-20230601-p5c6xo.html
- As the federal government contemplates a road user tax for electric vehicle (EV) drivers, the debate over funding road maintenance in the transportation industry has become intertwined with politics, policy-and-legislation, and finance.
- The proposed distance-based tax on EVs is part of a broader discussion in the automotive sector, with some advocating for a road-user charging system to address the shortage of funds from fossil fuel vehicles' fuel excise.
- The ongoing discussion about the road user tax for EV drivers extends beyond the federal government, involving state and territorial authorities, various frontbenchers, transport industry leaders, and general news outlets, shaping the broader landscape of policy-and-legislation in Australia.
