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NSW's flawed plan to tax electric vehicle drivers is unfair

By Daniel Gardner, 03 Jul 2020 Car Opinions

Hyundai Nexo fleet

Proposed ‘distance charge’ will sting electric vehicle drivers where fuel tax can't

Not only does the Australian federal government continue to lag behind the rest of the developed world with one of the least progressive zero-emissions private transport initiatives, but the New South Wales government is also now discreetly mulling a charge that taxes EVs for every kilometre they drive.

While many other nations introduce incentives and benefits to encourage drivers into sustainable cars, a federal financial relations report has revealed the NSW government is considering a ‘distance-based charge’ to make money out of EV owners where fuel tax can’t.

The report explains that, as low emissions vehicles grow in popularity, revenue generated by fuel tax will diminish and a new way of funding road maintenance and construction must be found.

Audi e-tron

Disappointingly, rather than recognising and praising the significant improvement of modern vehicle fuel efficiency and its role in the reduction of carbon emissions, the NSW government has chosen to see only the negative impact on this reduced dependence on fossil fuels.

Multiple taxes on EV ownership

“Fuel excise revenues are in structural decline as vehicles become more fuel-efficient," reads the report. “As electric cars increase their share of the total vehicle fleet, the ability of Australian governments to pay for road maintenance and construction from the proceeds of fuel excise will decline.”

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The distance-based charge would, therefore, offset the shrinking petrol and diesel tax coffers without rewarding EV owners for helping to reduce carbon emissions.

Adding insult to injury, the report does not recognise the tax already paid by EV owners to charge their vehicle using electricity at home and the effective double-dipping into EV owner’s wallets.

Nor does it propose any of the incentives used by other nations to encourage more people to ditch combustion power.

Tesla Model S charging

For example, California has been funding road projects through a similar EV distance charge as proposed in the financial relations review, but the US state has also plenty of deal sweeteners to reward Californian’s for making the switch to electric.

Buy a zero-emissions car in Cali and the Clean Vehicle Rebate could put as much as $7000 (A$10,000) back in your pocket. Qualify for the Clean Cars 4 All program and you could be handed up to $9500 (A$13,700) to put towards an EV.

Read next: New electric vehicles coming to Australia in 2020

The NSW report does indeed recognise that Australian’s want affordable electric cars at the point of purchase “Upfront, or ‘sticker’ prices, are much more important considerations than operating costs when making purchasing choices in the vehicle market,” it states.

And yet the review makes no suggestion of how to make zero-emission vehicles easier to buy for Australians, even though the Government has apparently found a way to line its pockets through EV ownership and after the initial purchase.

Mini Cooper SE

Victoria and ACT offer new EV owners a discount on initial registration costs, but it’s little more than a gesture, certainly not as generous as other nation’s initiatives, and there’s no word on a similar scheme for NSW.

NSW plans to punish EV drivers

Combined with its proposed distance charge, NSW is fast shaping up as the worst place you could own an EV.

The local government is apparently not completely against low and zero-emissions vehicles and has announced funding for charging infrastructure more publicly than its exploration of usage taxing.

In March this year, the NSW government confirmed it was allocating cash to fund EV infrastructure including expanding the fast charging network.

Porsche Taycan

Part of the plan includes benefits for property developers who include EV charging options in new build projects, as well as increasing public charging point options.

In its financial review, the NSW government says it doesn’t want drivers to be discouraged from buying or owning an EV by taxes that make them more expensive, and that the community should be happy to pay for the environmental advantages out of their own pocket.

Read next: Would this be a better alternative to an EV distance charge?
“A road user charge for electric vehicles should not be seen as an attempt to discourage their uptake by the community. There are many social advantages that arise from the use of electric vehicles, including lowering air and noise pollution.

“But there are other levers that can be used to support the move toward electric vehicles, including providing access to the infrastructure needed to charge their batteries quickly, especially on long trips.”

H2X Snowy


As well as an increased charging network, it announced incentives for businesses looking to establish an electric fleet, such as car-share and rental companies but, once again, little support for private owners of EVs.

Electric Vehicle Strategy delayed

Small steps forward aside, there’s more bad news for Australia’s ranking as an electric transport advocate with the federal government’s Electric Vehicle Strategy - a plan to manage the nation’s transition into an EV era - delayed with no new implementation date yet offered.

“Now is the ideal time to drive change in our transport sector by electrifying our cars and buses, so it’s disappointing the Federal Government has delayed its Electric Vehicle Strategy, due mid this year,” said Richie Merzian, the climate and energy program director at The Australia Institute.

Volkswagen ID3

“Australia is car-taker not maker, and most car manufacturers are moving to electric vehicles. The Federal Government could be investing in necessary infrastructure now to smooth the inevitable transition away from fossil-fuelled transport while building the know-how and jobs Australia needs into the future.”

While the important matter of charging infrastructure is slowly gaining traction along with compelling vehicles offered by a growing number of manufacturers, it seems private owners are still expected to bear the full cost of ditching petrol and diesel.