Victorians who own electric vehicles could have their registration cancelled if they fail to comply with a controversial new road user charge, which passed the state upper house late on Tuesday and now awaits only the formality of royal assent before it becomes law.
The tax will come into force from July 1. From that date, EV owners must keep a record of the kilometres they travel over each year through odometer readings, and at the end of the year provide that information to the authorities.
Failure to do so may result in registration being suspended or cancelled if motorists fail to pay on time, the explanatory memorandum to the legislation said.
The tax will initially be 2.5 cents per kilometre for full battery EVs and hydrogen fuel cell vehicles, and 2 cents for hybrids, but it will rise every year with inflation. The Victorian government has estimated that will initially amount to $330 a year on average, though it will be considerably more for motorists who travel longer distances.
The annual increase will be indexed to the “all groups consumer price index” for Melbourne, which the Australian Bureau of Statistics put at 0.8 per cent in the 12 months to March 2021.
The tax will only apply to kilometres covered on public roads. For motorists that clock up mileage on private roads, the burden of proof is on them to demonstrate that fact.
The bill had initially faced opposition in the upper house, where Labor does not have an outright majority, on the grounds that it was a regressive policy that would deter people from going electric.
To sweeten the pill, the Andrews government introduced a number of reforms, including $3,000 subsidies for up to 20,000 new EVs, and a promise to ensure 50 per cent of new car sales are zero or low emission vehicles by 2030.
This strategy worked, and the bill was passed with the support of crossbenchers in the Transport Matters party, the Reason Party, Derryn Hinch’s Justice Party, and the Animal Justice Party.
The Greens opposed the bill, and vowed to attempt to repeal a tax they argue will “make cutting Victoria’s growing transport emissions all the more harder”.
“This is in the midst of a climate crisis when we are lagging behind the rest of the world in the uptake of electric vehicles,” Victorian Greens transport sopkesman and MP for Prahran Sam Hibbins said in a tweet after the bill passed the upper house.
“The Greens will move to repeal this backwards tax on clean air,” he said, calling it calling it “the worst electric vehicle policy in the world”.
The Liberal-National opposition also voted against the bill.
The EV industry was a vociferous opponent of the road user charge from the moment it was floated last year, and while it has welcomed the $3,000 subsidies and the 2030 target, it remains opposed to the tax.
“The tax is deeply flawed and shouldnt be going through, and the incentives thye’ve put on right now aren’t enough to counteract the effect of the tax,” said Behyad Jafari, chief executive of the Electric Vehicle Council
Jafari pointed out that as EV owners were slapped with new costs, petrol and diesel cars remained free to emit as much carbon dioxide as they liked without penalty.
The Victorian government has not yet laid out a strategy to reach the 50 per cent EV sales target by 2030, but will set up a panel to advise on how to do this. Jafari said the EV industry must be part of that process.
“It’s vitally important the industry is represented on that panel, partuclarly given the tax was developed in secret and only engaged with industry once it was announced,” he said.
He said on the current trajectory, only 18-20 per cent of car sales would be EVs by 2030. More agressive incentives and CO2 emissions standards would therefore be needed to achieve the 50 per cent goal.
“Ideally things like CO2 standards should be national. You don’t want clunky state-based versions of things. But if there isn’t a federal government one, what measures could states take to replicate one?” Linking registration or stamp duty to emissions intensity was one option, he said.
He added that, in lieu any leadership at the federal level, states would need to work together to come up with a workable, coherent framework to boost EV uptake.
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.