Auto and energy industry players slam proposed EV tax at Senate inquiry

Major players in the auto and energy indusdry have slammed state government proposals to tax electric vehicles, saying such moves were short sighted and would stifle Australia’s nascent electric vehicle market.

Submissions to an inquiry ignited by a Greens proposal to penalise state governments for taxing electric vehicles have shown a strong alliance against the EV taxes from the auto and energy industry, including heavyweights Hyundai and AGL, as well as Evie Networks which is backed by coal baron Trevor St Baker’s epynomous Innovation fund.

In late 2020, Victoria and South Australia both announced they would introduce an “EV tax” which they say is to replace declining nationally collected fuel excise. NSW indicated that it may also copy the tax, although South Australia has now effectively dropped the idea, and punted the proposal beyond the next state election in 2021.

At the time the moves were widely condemned, and described by stakeholders as “madness” and like whacking a new tax on nicotine gum because people were smoking less tobacco.

Responses to the Senate inquiry to the “No Electric Vehicle Taxes” proposed by The Greens show that only two groups – conservative think tank Infrastructure Partnerships Australia (IPA) and the Australian Automobile Association (AAA) – support the introduction of a road user tax for electric vehicles.

Individuals who had their say on the bill said an EV tax would hamper efforts to decarbonise the economy, was tantamount to “criminal neglect,” and “counter-productive stupidity.”

Hyundai – the only brand in Australia that currently offers cars in four “eco” powertrains (all-electric, plug-in hybrids, hybrids and hydrogen, as well as petrol and diesel) – said it is “greatly concerned” that the fledgling zero-emissions vehicle market could be stifled by the introduction of an EV tax.

Evie Networks, one of a handful of companies rolling out ultra-fast charging infrastructure in Australia made possible by the backing of St Baker and $15 million in ARENA funding, notes the “significant economic, social and environmental benefits” the more EVs on the road would have including not killing 1,700 Australians a year from air pollution.

Representatives of both electric vehicle drivers and the EV industry both noted in strongly-worded submissions that the introduction of an EV tax would risk impeding Australia’s “woefully slow uptake of EVs,” as put by the nearly 50-year-old Australian Electric Vehicle Association (AEVA).

Like AEVA, the Electric Vehicle Council (EVC) supports the COAG Reform Fund Amendment (No Electric Vehicle Taxes) Bill 2020 to block state governments’ intent to impose premature new charges that, it says, would decrease the already lagging uptake of electric vehicles.

“It is concerning that the introduction of Road User Charges by several states does not focus on the far greater priority of charging based on emissions,” wrote CEO Behayd Jafari on behalf of the EVC.

He says the introduction of an EV tax is a “severe miscalculation of the needs and desires of the Australian people, who overwhelmingly support efforts to decarbonise and address climate change.”

“This shows why (Victorian treasurer Tim Pallas) announced the tax with no consultation, it’s widely derided by experts, industry and community,” Jafari said in a Tweet on Friday.

Jake Whitehead, who is chief research at the University of Queensland and released a preliminary report showing how an EV tax would stifle EV uptake says that introduction of an EV tax would mean states are unlikely to meet emissions reduction targets.

“The introduction of the proposed EV taxes risks pushing Australia even further into the wilderness in terms of EV uptake, and is completely incongruent with mid-century Net Zero Emission targets, which easily roll off the tongues of politicians, but are not backed up by concrete actions to bring them to fruition,” wrote Whitehead.

Unsurprisingly, the IPA was one of only two to support the introduction of an EV tax, while openly admitting the reason behind a reduction in fuel excise is because of more efficient fossil-fuelled vehicles, not EVs.

In fact, its submission admits that it sees EVs as an opportunity to “seize the emerging technology” to “see road reform achieved” (sic).

It suggests the COAG bill would mean eventually no users pay for roads, at the same time saying that Victoria’s plan to use the EV tax towards funding charging infrastructure and EV-ready buildings is a good idea.

Surprisingly, the AAA (Australian Automobile Association) which represents road groups such as NRMA, RACV, RACQ, RAA, RAC, RACT and AANT, and has injected millions into the roll-out of charging infrastructure, also opposes the COAG bill.

Noting the lack of overarching land transport strategy, and the need for certainty about funding in the future and support for new and emerging technologies, it says that fuel excise is discriminatory because lower-income earners typically drive older, thirstier vehicles, and suggested a road user tax should be introduced to EVs first but at a discounted rate until a threshold is reached.

Still, that suggestion ignores the fact that many Australians who drive electric cars have already made a stretch to do the right thing for the environment and future, on the understanding that the higher price paid upfront for an EV is at least partly offset by not paying for fuel.

AAA’s stance is also in contrast to member groups such as the WA-based RAC, which notes that an EV tax would stifle uptake. The RAC broadly supports the COAG bill and wants to encourage uptake instead.

AGL – one of the largest ASX-listed owners and operators of renewable power generation – wrote in its submissions that the “introduction of short-sighted and ad-hoc taxes will stunt the development of this emerging industry and leave Australia well behind other developed nations.”

Instead, it supports a nationally harmonised distance-based system – and says it should only first be applied to ICE to test parameters of such as system.

The Australian Logistics Council joined in this chorus, lamenting that the introduction of state taxes heralds a “precipice of disorder”, citing decades-long development of heavy vehicle road reform that has recommended nationally compatible and fair road user charging.