States should “slam the brakes” on electric vehicle taxes, says business lobby

One of Australia’s most influential business lobbies has called on state governments to “slam the brakes” on proposed electric vehicle taxes, describing them as a “major disincentive” in a market already lagging well behind the rest of the world on EV uptake.

The Australian Industry Group said on Monday that taxes proposed by various Australian state governments, led by the road user charge that is due to be applied to EV drivers in Victoria from July 1 this year, were at direct odds with Australia’s emissions reduction task.

“The new taxes on electric vehicle usage that are being developed in several states, and are now before the Victorian Parliament, are effectively putting the cart before the horse and should not be implemented until clean vehicles are better established and the taxes are better designed,” Ai Group’s chief Innes Willox said.

“Australia is currently well behind our peers in that transition. Our slow uptake of clean vehicles is holding back national progress towards emissions targets – and increasing the pressure on every other part of the economy to deliver cuts,” Willox said.

As The Driven has reported, South Australia has been threatening to introduce a form of tax on electric vehicles for some months now, followed by Victoria and New South Wales.

Victoria’s Labor Andrews government has plowed ahead with its plans, with Labor state treasurer Tim Pallas revealing in November of last year that the state’s EV owners would be charged 2.5 cents per kilometre, and plug-in hybrid owners 2 cents per kilometre, from July 1.

South Australia has plans to follow suit, but recently delayed the move by 12 months, beyond the state’s next election, extending some breathing room to the local EV market while waiting to see the final details of Victoria’s legislation and see it introduced in that state.

In the meantime, the public and industry response to the various planned EV taxes has weighed heavily against them, with critics including Hyundai and AGL, as well as Evie Networks which is backed by coal baron Trevor St Baker’s eponymous Innovation fund.

Indeed, as The Driven reported last month, responses to the Senate inquiry to the “No Electric Vehicle Taxes” proposed by The Greens found only two groups – conservative think tank Infrastructure Partnerships Australia (IPA) and the Australian Automobile Association (AAA) – in favour of the introduction of a road user tax for electric vehicles.

Adding its voice to the growing chorus of dissent this week, Ai Group’s Willox said Victoria’s tax, in particular, looked like a “major disincentive” that would work to undermine any other supportive policies.

“Victoria will soon set medium-term emissions targets, and they should be as high as the state can achieve without leaving vulnerable businesses, communities, workers and households behind,” he said.

“Holding back transport transition will make it harder to achieve those targets. The problem is not just the rate, but the red tape and paperwork involved in clunky new reporting arrangements.”

Willox said that while it was sensible to signal that drivers would need to continue to contribute to the cost of the roads they used in the clean car future, actually implementing taxes around this should wait until that transition was firmly established.

“Today we have a uniform national fuel excise system that is – for drivers, at least – very simple. Pricing road use is a complex reform with large potential benefits through more efficient use of our transport infrastructure. But an inconsistent patchwork of kludged-together taxes doesn’t bring those benefits any closer.

“Now is the time to be helping businesses and individuals access the cleaner vehicles that meet their needs and advance our shared net zero emissions goals.

“All sides of politics have the opportunity to develop coherent, and preferably nationally coordinated, incentives that are consistent with overall plans for achieving a net zero emissions economy by 2050,” Willox said.