Victoria’s controversial plan to charge battery electric vehicle drivers 2.5 cents per kilometre will mean they will often be paying more tax than petrol car drivers, the Electric Vehicle Council has warned.
The Labor Andrews government plans to bring in the road user tax in July. It claims the figure of 2.5 cents per kilometre is appropriate, because it is much lower than the equivalent that the average internal combustion engine motorist pays, which it puts at 4 cents per kilometre. Plug-in hybrid drivers will pay 2 cents per kilometre.
The government says the road user charge is necessary to make sure EV drivers contribute to road maintenance in lieu of the fuel excise. It argues this lower rate means there is still an incentive to go electric becauce you will be paying less tax.
But Behyad Jafari, chief executive of the EVC, says this is not true. He says the 4 cents per kilometre figure is based on cars that are 11 years old. New cars, he says, are much more fuel efficient, meaning there are many new cars that are paying the equivalent of less than 2 cents per kilometre.
He says the Toyota Yaris – which sold around 5,000 units last year, around the same as the total number of battery EVs – pays as little as 1.2 to 1.4 cents per kilometre.
While Jafari does not dispute older petrol cars will pay more, he says the only meaningful comparison for EVs is with new cars – because an EV itself is almost certainly going to be a new car.
“When you compare a new electric vehicle, which is a new car, being sold today with new petrol vehicles, there were some 100,000 vehicles sold last year that paid less tahn 2.5 cents per kilometre in fuel excise.
“Fuel excise works as a factor of fuel efficiency, so the more fuel efficient your vehicle, the less fuel you use, therefore the less excise you pay.”
He said he had brought this up with the Treasurer’s office, and they were “surprised to learn that”.
“Clearly they hadn’t done the work around how fuel excise works. We do know that last year or the year before, there was a lobby group that said the average was 4 cents per kilometre. And so clearly the Treasurer has just picked up that number and run with it.”
He said he has made that point a number of times, but it has made no difference to the policy, and the legislation has the 2.5 cents figure written into it.
The legislation is set to be voted on in May. If passed, it will become law on July 1. The Victorian government calculates after that the average EV driver can expect to pay around $330 a year, while the average plug-in hybrid driver will pay around $260 a year (plus the excise on however much fuel they consume).
But its success is not assured. While the Andrews government has a massive majority in the lower house, in the upper house it will rely on the support of independents and minor parties. The Liberal opposition has ruled out supporting it.
Jafari says currently the majority of crossbenchers oppose the bill, meaning the government will likely have to offer some concessions to get it through. He says he is hopeful this might include some more incentives to support EV uptake.
The tax has been broadly criticised as a perverse disincentive to EV uptake in a country that already lacks any incentives. Jafari says Victoria’s decision to push ahead regardless is more about wrestling control of road taxation off the federal government, which controls fuel excise, rather than any attempt to prevent EV uptake. But he says EVs have been caught in the crossfire of this battle for control of a potentially highly lucrative tax revenue.
James Fernyhough is a reporter at RenewEconomy and The Driven. He has worked at The Australian Financial Review and the Financial Times, and is interested in all things related to climate change and the transition to a low-carbon economy.