January 26, 2021

stacks

The Victorian government has proposed a new road usage tax for electric vehicles, mirroring moves in South Australia that some critics are saying could dissuade prospective buyers.



a car parked in a parking lot: Photograph: Jens Schlueter/Getty Images


© Provided by The Guardian
Photograph: Jens Schlueter/Getty Images

The tax would look to charge motorists 2.5c a kilometre for electric vehicles, while a 2c/km charge would be applied to plug-in hybrid vehicles.

Victoria’s treasurer, Tim Pallas, announced the new charges as part of the lead-up to the release of the state budget, saying he hoped the tax would create a “fairer system” for taxing road users.



a car parked in a parking lot: An electric car. Victorian treasurer Tim Pallas says revenue from the proposed tax on using the vehicles will be invested in improving roads, but some experts doubt it.


© Photograph: Jens Schlueter/Getty Images
An electric car. Victorian treasurer Tim Pallas says revenue from the proposed tax on using the vehicles will be invested in improving roads, but some experts doubt it.

But some critics have said the new tax flies in the face of the global movement towards zero emissions, and would potentially discourage people from taking up the new technology.

Related: ‘We’ll be left behind’: Australia’s electric car inertia is getting it nowhere

The Electric Vehicle Council’s chief executive, Behyad Jafari, told the Guardian the decision was “disastrous” and the government needed to rethink its approach.

“Australia is going to become the first country in the world to discourage people from buying electric vehicles by adding a new tax on to them.”

So, what are the arguments against this tax, and how do they stack up? We break it down for you.

Why do people think it’s a bad idea?

Simon Holmes à Court, a senior adviser to the Climate and Energy College at Melbourne University, said that although transport reforms were inevitable, this particular reform and its timing was a “terrible idea”.

“Australia is lagging behind the rest of the world with the electric vehicle transition.”

Electric vehicles have only 0.6% market share in Australia, according to the Global EV Outlook, compared with 2.6% globally and 4.9% in China.

Potential customers currently need to pay a luxury tax, a stamp duty and GST. Unlike in some countries, such as the US, there are no subsidies for electric vehicles in Australia.

“We already have a significant tax take on electric vehicles that we don’t see in other countries, which goes a long way to explaining why Australian uptake is so far behind the rest of the world.

“We disincentivise, rather than incentivise.”

Related: South Australia’s new tax on electric vehicles ridiculed as ‘a big tax on not polluting’

With the addition of a usage tax, Holmes à Court said electric vehicles would become more expensive in Victoria.

“A lot of people are holding out until they can afford it, and by putting this extra tax on top Victoria has just kicked it further into the future.”

According to the NRMA, hybrid cars start at about $26,500, but pure electric vehicles start at around $47,500. Buying used is also a challenge due to the small number of electric vehicles on the road in Australia.

Do fuel excises really pay for our roads?

Pallas said

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The Victorian government has proposed a new road usage tax for electric vehicles, mirroring moves in South Australia that some critics are saying could dissuade prospective buyers.

The tax would look to charge motorists 2.5c a kilometre for electric vehicles, while a 2c/km charge would be applied to plug-in hybrid vehicles.

Victoria’s treasurer, Tim Pallas, announced the new charges as part of the lead-up to the release of the state budget, saying he hoped the tax would create a “fairer system” for taxing road users.

But some critics have said the new tax flies in the face of the global movement towards zero emissions, and would potentially discourage people from taking up the new technology.

The Electric Vehicle Council’s chief executive, Behyad Jafari, told the Guardian the decision was “disastrous” and the government needed to rethink its approach.

“Australia is going to become the first country in the world to discourage people from buying electric vehicles by adding a new tax on to them.”

So, what are the arguments against this tax, and how do they stack up? We break it down for you.

Why do people think it’s a bad idea?

Simon Holmes à Court, a senior adviser to the Climate and Energy College at Melbourne University, said that although transport reforms were inevitable, this particular reform and its timing was a “terrible idea”.

“Australia is lagging behind the rest of the world with the electric vehicle transition.”

Electric vehicles have only 0.6% market share in Australia, according to the Global EV Outlook, compared with 2.6% globally and 4.9% in China.

Potential customers currently need to pay a luxury tax, a stamp duty and GST. Unlike in some countries, such as the US, there are no subsidies for electric vehicles in Australia.

“We already have a significant tax take on electric vehicles that we don’t see in other countries, which goes a long way to explaining why Australian uptake is so far behind the rest of the world.

“We disincentivise, rather than incentivise.”

With the addition of a usage tax, Holmes à Court said electric vehicles would become more expensive in Victoria.

“A lot of people are holding out until they can afford it, and by putting this extra tax on top Victoria has just kicked it further into the future.”

According to the NRMA, hybrid cars start at about $26,500, but pure electric vehicles start at around $47,500. Buying used is also a challenge due to the small number of electric vehicles on the road in Australia.

Do fuel excises really pay for our roads?

Pallas said in presenting the tax that the money made would be invested in improving roads. But some experts doubted that the tax would, whether directly or implicitly, go towards fixing roads.

An electric car charging station in Canberra
An electric car charging station in Canberra. Photograph: Mick Tsikas/AAP

“If fuel excise funded roads, we’d be driving on gold plated roads by now,” said Holmes à Court, explaining that fuel excise had not directly gone into roads since 1969.

He

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