In 2023, a landmark High Court ruling targeted and removed Victoria’s EV tax, significantly changing Australia’s approach to road legislation and the shift to clean technologies. As a result, the legal road-user charge for EVs implemented at the state level became unconstitutional and set a legal standard for the rest of Australia in determining the tax policies on EVs, as well as signalling policies for the future as the country implements its green agenda on road transport.
What was Victoria’s EV Tax?
In 2021, the state of Victoria became the first jurisdiction in Australia to apply a distance-based charge on zero-emission and low-emission automobiles. Specifically, EV and hydrogen- fuelled vehicles paid 2.8 cents for every kilometre, and plug-in hybrids paid 2.3 cents. Only hybrid vehicles powered by diesel or petrol were exempt. In the government’s view, the charge aimed to replace revenue gained on fuel excise as more motorists switched to EVs from fuel-powered vehicles.
The Legal Challenge: Why Was It Unconstitutional?
The High Court challenge came from two EV drivers in Victoria asking the court to rule that only the Commonwealth could impose such taxes as ‘excise’ under Section 90 of the Australian Constitution. Victoria argued that it did not tax goods or their consumption, but the High Court took the position of the majority that taxes closely linked to the consumption of goods, in this case, the use electricity to power the EVs, are excise duties, and only the Commonwealth can impose those duties.
The Implications of This Taxing Decision
With Victoria’s tax revoked, no state government can now impose the same taxes on electric vehicles. This passing tax requirement has brought the conversation to the Commonwealth that something ‘single and cohesive’ needs to be established. New South Wales, who intends to put in place their own road-user scheme in 2027, is likely to adjust or abandon their road-user scheme as predicted. It is a clear indication of the need to introduce cohesive policy. This would be aimed toward the maintenance and upgrading of roads to give funding, and to do it in a manner that would not discourage the uptake of EVs.
The Development of General Road Policies
With more electric vehicles on Australian roads, there is debate on how to replace the fuel excise revenue. For this reason, the fedral government is proposing a national EV road-use charge, which is expected to range between $300 and $400 a year. The intention is to make sure every motorist contributes to the road maintenance cost. However, critics consdier that such chargers will counter green vehicle incentives.
The Road Ahead: Equity, Certainty, and A Clean Transition
This case has made Australian policy makers highly considerate that road user charges in the future have to be federally legislated, equitable for all vehicle types, and considerate on the environment. Most people support the idea of including the cost of emissions and the ensuring that the new charge applies to all vehicles and not just EVs. The transport sector is transitioning to the electrification and Australia needs to ensure that this transition is on the new national road policies that are changing the road transport system to be just and equitable.
Table: Key Details—Victoria’s EV Tax Challenge
| Data Point | Details |
|---|---|
| Tax Amount (EVs) | 2.8 cents per kilometre |
| Tax Amount (PHEVs) | 2.3 cents per kilometre |
| Introduced | July 2021 |
| Ruled Unconstitutional | October 2023 |
| Likely Replacement | Federal road-user charge |
FAQs
1. What happens now for Victorian EV owners?
Victorian EV owners no longer pay the distance-based charge and no state-based EV only charges are valid.
2. Will a new tax be introduced nationwide?
The federal government is contemplating a national road user charge for EVs, however, specifics and timeline remain unclear.
3. Does this affect other states?
Yes. Other states that have planned EV road user charges will need to stop and redesign those ro schemes to meet constitutional requirements.
