January 17, 2021

Victorias

Victoria’s planned road user tax for electric vehicles will significantly hold back clean car use, according to research that found it could lead to a 25% lower share of sales in 2050 than otherwise expected.

The Andrews government plans to impose a 2.5c a kilometre charge on electric vehicles (EVs) and a 2c/km charge on plug-in hybrid cars from July. South Australia is also planning an EV road user charge, but is yet to announce the rate.

An analysis by Dr Jake Whitehead, from the University of Queensland’s Dow Centre for Sustainable Engineering Innovation, said federal government modelling had suggested EVs would be about 65% of new car sales by 2050, based on existing policies.

Modelling of the 2.5c tax rate – undertaken before Victoria made its announcement – found this would be expected to fall to 40% if the additional cost was imposed without being accompanied by new incentives.

Applied nationally, this would equate to at least 4.9m fewer EV sales. Whitehead said it would likely lead to greenhouse gas emissions from transport continuing to increase given the overall number of cars on the road were forecast to rise significantly and a greater proportion would run on fossil fuels.

He said the EV per kilometre charge policy was “completely incongruent” with the states’ targets of reaching net zero emissions by 2050.

A road user tax could make sense, he said, but should be accompanied by other measures that made buying clean cars more attractive, such as removing or reducing registration costs, stamp duty, GST and road tolls. Victoria has a $100 concession on registration for EVs and hybrids. Whitehead suggested this was not enough.

“It is very easy to claim net zero targets, but there needs to be commitments to back it up and this is running in the wrong direction,” Whitehead said.

Only about 0.6% of new cars sold in Australia are electric, a lower share than virtually all other OECD countries. National transport emissions have increased by 17% since 2005.

The federal government promised a national EV strategy last year, but Scott Morrison attacked a Labor policy to promote the technology during the subsequent election campaign as a plan to “end the weekend” and the Coalition policy was later delayed. It has now been rolled into a “future fuels” policy, covering EVs, hydrogen and biofuels, with a consultation paper promised before the end of the year.

The push to introduce road user charges for clean cars is based on the argument drivers pay for roads through a national excise on fuel, and EV drivers do not pay this charge.

Critics of the plan point out fuel excise goes into general budget revenue and is not specifically dedicated to road funding, and that EV use needs to expand rapidly to cut emissions given the urgency of the climate crisis.

The states believe introducing a road user charge will be easier now, when there is a small EV market and many owners are comparatively wealthy, and would be more

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Victoria’s planned road user tax for electric vehicles will significantly hold back clean car use, according to research that found it could lead to a 25% lower share of sales in 2050 than otherwise expected.



a hand holding a camera: Photograph: Andrew Matthews/PA


© Provided by The Guardian
Photograph: Andrew Matthews/PA

The Andrews government plans to impose a 2.5c a kilometre charge on electric vehicles (EVs) and a 2c/km charge on plug-in hybrid cars from July. South Australia is also planning an EV road user charge, but is yet to announce the rate.

An analysis by Dr Jake Whitehead, from the University of Queensland’s Dow Centre for Sustainable Engineering Innovation, said federal government modelling had suggested EVs would be about 65% of new car sales by 2050, based on existing policies.

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

Modelling of the 2.5c tax rate – undertaken before Victoria made its announcement – found this would be expected to fall to 40% if the additional cost was imposed without being accompanied by new incentives.

Applied nationally, this would equate to at least 4.9m fewer EV sales. Whitehead said it would likely lead to greenhouse gas emissions from transport continuing to increase given the overall number of cars on the road were forecast to rise significantly and a greater proportion would run on fossil fuels.



a hand holding a camera: A charging cable being connected to an electric vehicle. Victoria plans a 2.5c/km charge on electric cars and a 2c/km charge on plug-in hybrid cars from July.


© Photograph: Andrew Matthews/PA
A charging cable being connected to an electric vehicle. Victoria plans a 2.5c/km charge on electric cars and a 2c/km charge on plug-in hybrid cars from July.

He said the EV per kilometre charge policy was “completely incongruent” with the states’ targets of reaching net zero emissions by 2050.

A road user tax could make sense, he said, but should be accompanied by other measures that made buying clean cars more attractive, such as removing or reducing registration costs, stamp duty, GST and road tolls.

“It is very easy to claim net zero targets, but there needs to be commitments to back it up and this is running in the wrong direction,” Whitehead said.

Only about 0.6% of new cars sold in Australia are electric, a lower share than virtually all other OECD countries. National transport emissions have increased by 17% since 2005.

The federal government promised a national EV strategy last year, but Scott Morrison attacked a Labor policy to promote the technology during the subsequent election campaign as a plan to “end the weekend” and the Coalition policy was later delayed. It has now been rolled into a “future fuels” policy, covering EVs, hydrogen and biofuels, with a consultation paper promised before the end of the year.

Related: ‘Disastrous’ or a smart move? How Victoria’s case for an electric car usage tax stacks up

The push to introduce road user charges for clean cars is based on the argument drivers pay for roads through a national excise on fuel, and EV drivers do not pay this charge.

Critics of the plan point out fuel excise goes into general budget revenue and is not

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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.



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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