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Australian government admits it will ‘probably’ tax electric cars soon

Australian government admits it will 'probably' tax electric cars soon

Australian Treasurer Jim Chalmers has hinted the Federal Government could introduce an electric vehicle (EV) tax in the coming years to recoup lost fuel excise revenue as people move away from petrol- and diesel-powered vehicles.

At the National Press Club of Australia, Dr Chalmers spoke about the mooted tax, without giving specifics on how it would be implemented.

“I think in the next few years an increasing focus, certainly of our government, and most likely governments that follow us, will be this public policy challenge, this revenue challenge, this challenge to the revenue base,” said Dr Chalmers.

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“There’s a big part of this is states-related. There’s a court case underway right now which goes to the core of this.”

Supplied Credit: CarExpert

“It is part of the discussions I have with my state and territory colleagues, and in the coming years people will come at this challenge,” added Dr Chalmers.

“Our focus for the time being is a couple of strategies that [Minister for Infrastructure, Transport, Regional Development and Local Government] 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.

“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.”

The court case Dr Chalmers is talking about is the High Court challenge to Victoria’s zero or low-emission vehicle (ZLEV) road-user charge that requires EV, hydrogen fuel-cell electric vehicle (FCEVs) or plug-in hybrid electric vehicle (PHEVs) owners to pay a certain amount per kilometre they drive.

Supplied Credit: CarExpert

From July 1, 2023, this Victorian road-user charge went up from 2.6 cents per kilometre to 2.8 cents per kilometre for EVs and FCEVs, and from 2.1 cents per kilometre to 2.3 cents per kilometres. These represent increases of 7.7 and 9.5 per cent, respectively.

As of August 1, 2023, the fuel excise is 48.8 cents. This amount is added to every litre of petrol or diesel when Australian motorists fuel up at the bowser.

The Federal Government expects to collect $13.71 billion net in fuel excise earnings in the 2022-2023 financial year.

Over the last decade around 59 per cent of fuel excise revenue has been spent on developing and maintaining the road transport system.

Supplied Credit: CarExpert

Victoria was the first Australian state to adopt a road-user charge (tax) for EVs, FCEVs and PHEVs, however, the New South Wales and Western Australian Governments are aiming to roll out similar taxes around 2027.

South Australia introduced one as well, but the recently elected Labor Government there has subsequently repealed it.

Until the end of July 2023, 49,938 electric passenger, SUV and light commercial vehicle were sold in Australia, which is up 385.4 per cent year-to-date.

For context, petrol passenger, SUV and light commercial vehicles (342,525 sales) over the same period went up by 7.0 per cent, whereas diesel passenger, SUV and light commercial vehicles (203,730) went down by 5.0 per cent.

MORE: Victorian electric car tax facing High Court challenge

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