Senate dumps on Victoria EV tax plan, but opposes move to cancel revenues

A federal senate committee has hit out against State government proposals for new taxes targeting electric vehicles, but has opposed a Greens proposal to effectively cancel out revenues raised by such taxes.

The Australian Greens proposed legislation that was designed to nullify the ability of State governments to impose new taxes on electric vehicles. The proposed legislation would see federal government distributions from GST receipts paid to State and Territory governments reduced by the amount of revenue raised through any levies imposed on electric vehicle drivers.

The bill was motivated by a new tax being proposed by the Victorian government – and deferred in South Australia – that would specifically target plug in hybrid and all-electric vehicles, introducing a new per kilometre charge on those vehicles in the state.

The Victorian State government is in the process of legislating a road-use tax on electric vehicles of 2.5 cents per kilometre driven.

It says the tax is justified as electric vehicles avoid fuel excise tariffs, but that plan has been slammed for penalising early adopters of electric vehicles, particularly at a time when governments should be supporting increased uptake, and because the biggest reason fuel excise tariffs are down is the uptake of “mild” hybrids, which are not included in the state plan.

The Victorian tax passed the state parliament’s lower house last week and will be considered by the parliament’s upper house, where the Labor government does not hold a majority. The tax would increase the average operating costs of electric vehicles by hundreds of dollars a year.

Victoria has moved to counter opposition by introducing a new $3,000 rebate for new EV purchases, but this initiative appears to be conditional on the road tax going ahead.

The South Australian and New South Wales governments have considered the introduction of similar measures, but South Australia has deferred it to after the next election.

The proposed federal Greens bill has been considered by the senate’s Economics Legislation Committee, which published its report on Monday.

The committee, which had a majority of members from the Liberal and National Coalition, said the proposed Greens legislation would further complicate national transport policy rather than addressing the underlying challenges.

While the committee declined to endorse the proposed Greens legislation, there was almost unanimous agreement that the Victorian government’s proposed EV tax was not the right way to approach transport reforms.

“The committee notes the consistent support for EVs through most of the submissions received. With currently only a 1 per cent take-up rate, there is a general consensus in those submissions that more could be done to encourage Australian consumers to purchase EVs. The idea of imposing a tax specifically on EVs has met with significant opposition,” the committee report says.

The committee’s report includes dissenting reports from the Australian Greens and independent senator Rex Patrick, each taking the opportunity to slam both federal and state governments for lack of coordinated electric vehicle policies that have seen Australia lag behind many other countries when it comes to electric vehicle uptake.

“Australia is on a journey to net zero carbon emissions by 2050. The Morrison Government claims the pathway will be through “technology, not taxes”,” Patrick said.

“EVs are a technology that must be part of the journey, yet the Federal Government’s standing by and allowing states to impose taxes on that technology, a clear disincentive. It would also, as the Electric Vehicle Council explained, make Australia the first country in the world to discourage EV uptake. This not a category we want to be first in.

Australian Greens transport spokesperson, Janet Rice, said state government taxes on electric vehicles ignored the role EVs could play in reducing Australia’s greenhouse gas emissions, and the emergence of new tax proposals was a result of a lack of national leadership.

“The proposals put forward by state governments will have profoundly problematic impacts on EV uptake when it is crucial that EV uptake is encouraged to address the climate crisis. As outlined above, a vacuum in Commonwealth policy has resulted in fragmented, disjointed proposals by state governments. ”

Labor senators offered a more circumspect commentary on the proposed legislation. While Labor has likewise criticised the Morrison government for its lack of support for electric vehicles, Labor senators said that changes to GST distribution rates to states were not an appropriate way to address lacklustre electric vehicle policies.

“Labor Senators maintain that changes to the GST formula and distribution needs careful consideration and consultation, and that the proposed bill would inhibit future arrangements,” they said.

CEO of the Electric Vehicle Council, Behyad Jafari, said that the conclusions of the report were reflective of the wider national discourse around electric vehicles, and Australia was losing out.

“The findings of the report are a recognition that current policies on electric vehicles are not up to scratch and that the Victorian government’s proposal is the wrong approach,” Jafari told The Driven.

“It is Australia that is missing out on the benefits of electric vehicles because of the lack of government support. It’s not the electric vehicles industry that’s losing out because the industry is thriving overseas.”