Australia is on the cusp of becoming the first country in the world to discourage the uptake of electric vehicles (EVs) through targeted road-user charges.
The state governments of Victoria and South Australia have proposed new levies on low-emission vehicles to compensate for their avoidance of fuel excise tax, with both state treasurers justifying the policies as an attempt to ensure all motorists pay their fair share for road maintenance.
Victorian Treasurer Tim Pallas said in November that the proposed levy – which would come into effect on July 1 and charge EV users 2.5 cents for every kilometre they travel – would raise $30 million over four years and cost the average motorist between $260 and $300 a year.
He told The New Daily on Thursday, however, that the levy would raise less revenue than the $45 million the state government had put towards policies supporting greater EV uptake.
But Victorian Greens senator Janet Rice has tabled a bill before the Senate to discourage the states from going ahead with their plans, arguing they would dissuade people from buying EVs and hamper the move to net-zero emissions.
Senator Rice’s bill seeks to establish a new condition on financial assistance provided by the Commonwealth government to neutralise the revenue effect of “taxes and charges imposed by states and territories on the purchase and use of electric vehicles”.
If passed, the legislation would see the Commonwealth deduct any revenue raised from taxing EVs from the amount of money it would normally pay the state that raised this revenue.
“We can’t stop the state governments from doing it. But the feds would be able to make it not worth their while financially,” Senator Rice told The New Daily.
The bill will be reviewed by the Senate Standing Committee on Economics, which received submissions from the public up until Thursday.
Richie Merzian, climate and energy program director at the Australia Institute, welcomed the bill but said state and federal governments must do more to encourage car makers to export to Australia the most sustainable and affordable-to-maintain electric vehicles.
He said a hostile policy environment and lack of fuel efficiency standards meant Australia was now “a dumping ground for dirty cars”.
“Right now, it is just plain unfair that states like Victoria or South Australia are likely to receive the same share of GST revenue as they have in the past, and then [gain] additional revenue from EV taxes on top,” Mr Merzian said.
“Unfortunately the federal government is nowhere when it comes to EVs. This bill puts them in the driver’s seat, at least when it comes to stopping the states from making things worse.”
His comments come after the Electric Vehicle Council (EVC) on Wednesday released data showing Australia is lagging far behind other advanced economies in electric car sales.
Last year, 6900 electric cars were sold in Australia.
Although that was 2.7 per cent more than in 2019, it accounted for just 0.75 per cent of total cars sold in Australia that year, which was a much smaller proportion than that sold in the UK, US and Europe.
Electric vehicle sales in the EU increased their market share from 3.8 per cent in 2019 to 10.2 per cent in 2020.
Meanwhile, their market share rose from 3.1 per cent to 10.7 per cent in the UK, from 7.6 per cent to 8.1 per cent in California, and from 56 per cent to 75 per cent in Norway.
EVC chief executive Behyad Jafari laid the blame for Australia’s lacklustre EV uptake at the feet of its politicians.
“There’s simply no sugarcoating it at this point – Australia has marked itself out as a uniquely hostile market to electric vehicles,” Mr Jafari said.
“We have no targets, no significant incentives, no fuel efficiency standards – and in Victoria we even have a new tax on non-emitting vehicles.”
Mr Jafari said the EV taxes proposed in Victoria were premature and would discourage people from buying low-emission vehicles – a point he reiterated in a submission to the Senate Standing Committee on Economics.
Among other things, the submission says the federal government should offer consumer incentives for EVs until they account for 10 per cent of the overall car market, while delaying the introduction of road-user charges for EVs until either 2030 or the time when this target is reached.
“Victoria is now doing what no other jurisdiction on Earth does by discouraging people from buying electric vehicles by slugging them with a special tax,” he said.
“When this policy idea gets pushed by the oil lobby around the world, they typically get laughed out of the room. Tim Pallas cut them a key to his office.”
EVC’s submission to the Senate cites research by consultancy EY, conducted on behalf of the council, that found EVs do not drain revenue from the public purse but instead create upwards of $8700 in net benefits to government and society.