Industry Calls to Cut Victoria’s Electric Vehicle Tax

A charging device for the the new Nissan Leaf in a Nissan manufacturing plant in Melbourne, Australia on Jul. 11, 2019. Michael Dodge/Getty Images

The Australian Industry Group, a leading industry association, has lobbied for Victoria’s Labor government to defer its decision to enact an electric vehicle tax, warning that the result will disincentivise the transition to cleaner vehicles.

The tax proposed by Victorian Treasurer Tim Pallas is expected to become law by July 1, and will charge zero-emission vehicles 2.5 cents per kilometre and hybrid vehicles 2 cents per kilometre, a toll that’s expected to generate $30 million over four years.

Australian Industry Group Chief Executive Innes Willox said that, while the tax was needed, the poor timing will lead to a slower acceptance of electric vehicles, contradicting the nation’s goal to reduce carbon emissions.

“Road infrastructure needs to be paid for, and it will be important in the long term to maintain the tax base as batteries and fuel cells replace petrol tanks in Australia’s vehicle fleet,” Willox said.

“But Australia is currently well behind our peers in that transition. Our slow uptake of clean vehicles is holding back national progress towards emissions targets—and increasing the pressure on every other part of the economy to deliver cuts.”

Tesla electric car charging station at The Star Casino in Sydney, Australia on Apr. 14, 2015. Photo by Ben Rushton/Getty Images

In particular, Willox pointed out that the tax may ultimately hinder the state’s progress in meeting carbon emission reduction targets. Targets that were set forth in the state’s Net Zero Emissions by 2050 plan.

Instead, Willox suggested that the Victorian government should halt the tariff and prioritise a more effective solution that may assist in the reduction of emissions overall.

“Victoria and the rest of the states should slam the brakes on these taxes and spend the next several years working together with the Commonwealth on a solution that is roadworthy,” he said.

Victoria has not been the only state to push for a tax on cleaner vehicles, with South Australia’s Liberal government proposing a similar road user charge in the 2020-2021 state budget (pdf), which was set to commence in July this year. However, since then, South Australia has delayed its scheduled introduction until July 2022.

On the other hand, the Royal Automobile Club of Victoria (RACV), a motoring organisation providing roadside assistance and other services, has argued that the tax will instead benefit road users.

In a media statement, RACV senior engineer Nicholas Platt said the “EV levy lays the foundation for a fair and efficient user-pays system.”

Platt explained that motorists in conventional petrol cars pay a fuel excise of about 42 cents a litre, providing funding towards road maintenance and infrastructure. Electric vehicles, on the other hand, avoid the charge entirely, despite sharing the same roads.

“As the number of zero-emission cars on our roads continues to grow, the EV tax will make up for lost fuel excise, so authorities can continue to fund and maintain Victoria’s roads,” Platt said.

Platt also said the levy would most likely not discourage the uptake of electric and other low-emission vehicles. But the RACV would still like for governments to investigate methods that may encourage the transition to cleaner forms of transportation.

AAP contributed to this report.