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Victoria slammed for introducing EV road tax

By David Bonnici, 23 Nov 2020 Car News

EV TAX

Victoria has followed South Australia down the path of electric vehicle taxation with NSW likely to follow

Need to Know:

  • Victoria wants to charge 25c/km for zero emission vehicles

  • PHEVs will be charged 20c/km

  • Critics argue it is too soon to tax EVs

  • The AAA says an EV tax is fair

Motoring and environmental groups have condemned the Victorian and New South Wales governments for following South Australia’s lead in imposing a tax on electric vehicles.

The Victorian Government at the weekend announced its Zero and Low Emission Vehicles (ZLEV) Road-User Charge as one its Budget measures, which imposes a 2.5c/km charge on electric and other zero-emission vehicles, including hydrogen vehicles, and a 2.0 cent/km charge to plug-in hybrid-electric vehicles, despite PHEV owners already contributing to the federal fuel excise.

The New South Wales government had earlier announced a similar plan but has yet to make it official.

nissan leaf

The decision to tax electric vehicles at a time when governments around the world are offering considerable financial incentives to speed up their uptake has predictably raised the ire of motoring and environmental groups, including the Electric Vehicle Council [EVC], which claimed Victoria's EV tax “slams the brakes on the State’s transition to a cleaner, healthier urban environment".

EVC chief executive Behyad Jafari said the decision was perplexing given the State’s aspiration to reach net zero emissions by 2050.

"These taxes are like replacing declining tobacco excise
with a new tax on nicotine patches." - Behyad Jafari

“Victoria simply won’t reach its goal of net-zero carbon emissions by 2050 if it taxes electrical vehicles. This is deeply counter-productive and makes very little sense.

“No other nation on Earth has thought it sensible to apply a special new tax to electric vehicles.

MORE South Australia wants to impose an EV tax

“Why would we slow the transition to cleaner and healthier air by imposing a new and unnecessary tax?”

Jafari’s comments were echoed by the Federal Chamber of Automotive Industries (FCAI)’s chief executive Tony Weber, who said Australian state governments want to kill EV technology at its infancy. 

“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,” Weber said.

MORE How Australia's EV incentives stack up globally

 “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.”

Unlikely support

The Australian Automobile Association supports the EV tax, saying the Victoria’s decision to join South Australia and possibly New South Wales to introduce a new charging regime for zero and low emission vehicles is “another step in the right direction.”

But AAA managing director Michael Bradley warned there needed to be a new national model for funding transport projects from revenue raised from motorists.

“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," he said.

MORE: Fuel tax or road tax? Which would you prefer?

“The Federal Government must step in and ensure tax changes are nationally consistent, equitable, and progressed in a manner that does not disincentive technological transition.”

Weber agreed that the decline in fuel excise revenue and the taxation of motorists and their vehicles was a long-term issue that needed to be addressed.

“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,” he said.

But Jafari said charging a tax on EVs because they don’t contribute to the fuel excise "was like replacing declining tobacco excise with a new tax on nicotine patches".

"They are madness," he said.

“Fuel excise income is not quarantined for roads and will drop in the long run. But as we shift away from petrol and diesel, diseases linked to air pollution and other costs associated with climate change will also decrease.

MORE Australia is the world's EV laughing stock

“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.

“We have been seeking a meeting with the Victorian Treasurer [Tim Pallas] to explain all of this for the past year. Unfortunately, he has repeatedly declined. This is a shame as we would love the opportunity to explain how electric vehicles can support his Government’s excellent carbon reduction targets.”

'Fair and sensible'

A Victorian Government spokeswoman told WhichCar the EV tax, which will apply from July 1, 2021, was a fair and sensible change that makes sure all Victorian motorists pay their fair share for the record investments in our roads network.

“It’s not fair that a tradie driving a ute is paying to maintain our roads, but someone driving a Tesla is not.”

Tesla Model 3

The spokeswoman did add, however, that tomorrow’s Victorian Budget will include funding for measures that help accelerate the take-up of electric and low emissions vehicles, ensuring Victoria pushes towards a clean energy future. 

WhichCar also asked the Victorian government how it will determine the kilometres travelled by an EV to charge the tax and how it will be applied, but has yet to receive an answer.

How Victoria’s EV tax compares to fuel excise

Whenever you add petrol or diesel to a car you pay a fuel excise of 42.3c per litre. This works out to be about 2.5 cents per kilometre for a car that consumes 6.0L/100km.

This means EV drivers in Victoria will end up theoretically paying more than the excise for drivers of small cars and crossovers that have an official combined fuel economy below 6.0L/100km such as the 2.0-litre Mazda 3, Toyota C-HR Hybrid and Suzuki Vitara Turbo.

Of course, most drivers don't really notice they're paying the fuel excise because it's paid in instalments whenever they fill up. 

However, it remains to be seen how and when EV owners will pay the road tax, which at 2.5c/km will attract a maximum $375 levy if travelling the average 15,000km per year.