The High Court of Australia has struck down the Victorian government’s tax on drivers of electric vehicles (EV) and plug-in hybrid vehicles.
Under the state government’s Zero and Low Emission Vehicles (ZLEV) road user charge, drivers of these vehicles were taxed according to every kilometre they drove.
The government reasoned that all drivers of traditional vehicles paid fuel excise, through the purchase of petrol and diesel, to fund the maintenance and development of roads.
Further, while the ZLEV is called a “user charge,” the majority concluded that it effectively imposed a “duty of excise,” and therefore came under section 90 invalidating the state tax.
“The ZLEV charge, accordingly, is an excise.”
This was the first time in the 21st century that the scope of section 90 in the Constitution has been examined by the High Court.
Lawyer David Hertzberg said it was a “landmark constitutional decision.”
“Today’s judgment means that Victoria’s electric vehicle tax is invalid. It also sets a precedent which will likely prevent other states from implementing similar legislation,” he said.
K&L Gates partner Matthew Cridland highlighted the ramifications of the ruling, warning that at the extreme, it could have stripped the ability of state governments to impose taxes on any goods.
The case was launched by Victorians Chris Vanderstock and Kath Davies shortly after the tax was introduced on July 1, 2021.
They welcomed the court’s ruling on what has been dubbed the “worst EV policy in the world.”
“This is a great outcome not only for Victorian electric vehicle drivers, but for all Australians,” Mr. Vanderstock said.
“Electric vehicles are fun to drive, but they also help decrease carbon emissions, reduce pollution, and improve our health.
No Federal EV User Road Charge In Sight
ZLEV charged drivers of EVs up to 2.8 cents per kilometre and drivers of plug-in hybrids up to 2.3 cents per kilometre.Meanwhile, the federal fuel excise currently charges drivers 48.8 cents for every litre of fuel bought.
“Our focus, for the time being, is a couple of strategies that [Minister for Transport] Catherine King and [Minister for Climate Change and Energy] Chris Bowen are consulting on and working up when it comes to the broader environment and infrastructure for electric vehicles,” he said.
“No doubt at some point, probably relatively soon, by which I mean in the next few years, a government—our government or our successor—will turn our mind to it.”
She revealed that in one instance, a driver of a plug-in hybrid was charged the ZLEV tax after travelling thousands of kilometres on fuel, due to the lack of charging stations in remote Australia.
“Despite the driver paying fuel excise on those kilometres, the department did not waive the additional hundreds of dollars payable under the ZLEV charge,” Ms. Glass said.