Victoria’s controversial EV road user tax to increase from July 1

Victoria’s controversial electric vehicle road user tax will increase by 0.1 cents per kilometre when the 2022-23 financial year ticks over on July 01, taking the charge for EVs and hydrogen vehicles to 2.6 cents/km and for plug-in hybrids to 2.1 cents/km.

According to VicRoads, which collects the Zero and Low Emissions Vehicle (ZLEV) road user charge on behalf of the Andrews Labor government, the increase is in line with other government indexed fees and charges that come into effect each new financial year.

The increase, while no doubt small, will do nothing to win people over to the much maligned policy measure, which was introduced in July 2021 at an estimated average cost to Victorian EV drivers of $330 a year.

Critics – and there are many – argue that the introduction of a road user charge so early in Victoria’s transition to EVs, and alongside incentives for uptake such as the $100 discount on annual registration fees and the $3,000 subsidy, sends a mixed message on the benefits of driving electric.

In Western Australia, for example, the Labor government has also proposed a distance-based road user charge for zero and low-emission light vehicles, but will hold off on its introduction until July 1, 2027, to give the state’s new $3,500 EV subsidy a chance to drive uptake.

Critics of Victoria’s ZLEV tax have also argued that costs involved in compliance – which requires drivers to send through photos or other proof of their odometer readings or risk registration cancellation – will likely offset the revenue raised from the tax.

As The Driven has reported, EV industry broadly accepts that a road user charge is inevitable as car fleets transition to electric, but argues it should be introduced fairly and evenly.

It points out the petrol excise goes into general revenue rather than road funding, and EV owners pay more tax than petrol car owners due to higher taxes from GST, stamp duty, and luxury car tax.

“They think in the long term it’s a way to take road excise away from federal government, but there is no regard for what this will do for states’ ability to reduce carbon emissions and increase EV uptake,” said Electric Vehicle Council CEO Behyad Jafari back in November 2020, when the ZLEV tax was first flagged.

“This new tax is built on a myth. Fuel excise income is not quarantined for roads and will drop in the long run. But as we shift away from petrol and diesel, diseases linked to air pollution and other costs associated with climate change will also decrease,” Jafari said.