“Madness”: EV advocates take aim at NSW move to copy electric vehicle tax

The Electric Vehicle Council (EVC) and industry experts have expressed outrage at news that NSW will likely follow South Autralia and introduce an electric vehicle road tax, even though the same proposal in South Australia will likely face defeat in parliament.

NSW treasurer Dominic Perrottet has reportedly ruled out introducing an electric vehicle tax in the state’s budget to be delivered next Tuesday, but has told reporters that “it’s obviously something I want to take to cabinet in the next 12 months.”

Perrottet was quoted as saying: “Obviously we want cleaner vehicles, we want innovation,” but also said that, “at the same time we want to pay for road maintenance as well.”

With South Australia’s EV tax proposal unlikely to garner crossbench support, it would mean that NSW could take its place as the only jurisdiction in the world to penalise drivers who switch to clean, electric transport, flying in the face of governments worldwide encouraging uptake with financial incentives for drivers.

“No other jurisdiction in the world – aside from the South Australian Coalition Government this week – has thought it sensible to apply a special new tax to electric vehicles,” said Electric Vehicle Council CEO Behyad Jafari in a note by email.

The statement from Perrottet is in stark contrast to a January tweet from NSW minister for energy Matt Kean, who owns a Tesla Model 3, that the state government was on the cusp of introducing incentives to encourage drivers to buy more electric vehicles.

“Most comparable countries incentivise EVs (inc. waiving taxes), yet NSW is planning to slap on additional taxes? Transport is the next sector to decarbonise… let’s not slow it down,” said energy transition specialist Simon Holmes à Court via Twitter on Thursday.

Tony Weber, CEO of the Chamber of Automotive Industries (FCAI), said on Friday that tbe NSW proposed EV tax shows just how out of step certain rule-makers are.

“All around the world, global automotive companies have invested billions of dollars to develop environmentally friendly vehicles,” Weber said in a statement.

“And all around the world, progressive governments have supported the introduction of these vehicles. But here in Australia, we inhibit their introduction by levying extra charges on them.  It simply beggars belief at this early stage of electric vehicle introduction,” Weber said.

Jafari notes that claims EV drivers are not paying for roads is misleading, as fuel excise is not directly used for road maintenance, and EV owners pay more in general tax through GST, stamp duty and other taxes.

“The money paid in fuel excise doesn’t get quarantined for roads. That’s a myth. If tax is dwindling from one area, governments don’t have to make it up from that same area. That would be like whacking a new tax on nicotine gum because you’re worried about a drop in the tobacco excise. It’s madness.”

Plug-in electric vehicles currently make up 0.6% of the national fleet. In South Australia, it was forecast an EV tax would bring in only a modest $1 million in funds from drivers.

“One day, when electric vehicles start becoming common place, the time may come to consider new taxes. But at this point in our history, when we should be doing everything possible to encourage people to switch to electric vehicles, this tax would be pure poison,” says Jafari.

“Of all the jurisdictions in the world New South Wales would have to be one of the last who should worry about the speed of EV uptake. New South Wales is already languishing up the back of the pack in the global race toward electric vehicles. Mr Perrottet now wants to blow out our tyres.”

The news also contradicts the NSW government’s own stance on electric vehicles. In March, it outlined a plan to increase the number of electric vehicles in the state fleet that would increase availability of secondhand vehicles over time, as well as increasing charging infrastructure.

As previously outlined in a 2019 EVC report, electric vehicles can not only help reduce the costs associated with a warming climate, but also save thousands in health costs.

“Yes, in the long run governments won’t be receiving as much in fuel excise as people drive more efficient vehicles,” says Jafari.

“But that’s a good thing. Burning less foreign oil in our cars is good for our city air, it’s good for our health, it’s good for our climate, and it’s good for our economic sovereignty.”

Jafari points to research released by EY in September that disproves the notion that electric vehicles are a burden on the taxpayer.

Instead, they can actually help contribute $4.4 billion to the national economy even if only 25% of the fleet were electric.

“Modelling by EY, released just weeks ago, shows every electric car sold today is a net win for government coffers and a net win for the economy more broadly. Why would any government try to discourage that?” says Jafari.

Introducing an electric vehicle tax would in effect do the opposite, he says.

“As any Liberal worth their salt will tell you, when you whack a big new tax on something you discourage its use. That’s exactly what would happen here to the determent of every citizen in New South Wales – and to the detriment of the planet.

“New South Wales is already a global dirty car magnet because other nations have restrictions on emissions. Mr Perrottet’s plan would well and truly cement that status.”