Unsurprisingly, the EV FUD (fear, uncertainty, doubt) is being run again by those hell bent on ICE vehicles, all of which produce carcinogenic pollution, being kept in our national fleet forever so Australians are forced to remain dependent on expensive foreign fuel.
It’s time for a Fact Check.
Fact #1: Fuel excise DOES NOT directly fund our roads. Fuel excise goes into the same bucket as the income tax we pay. This is called general consolidated revenue and is distributed to pay for defence, health, education, social services and transport.
Fact #2: EV owners already pay taxes that contribute to general consolidated revenue. EVs are generally more expensive to purchase so they pay more in GST, stamp duty, luxury car tax. Taxes are also paid through registration, GST on electricity for charging and servicing. PHEV (plug-in hybrid) owners pay fuel excise for the fuel purchased. BEVs (battery electric vehicles) don’t pay fuel excise because, guess what, they don’t use fuel.
Fact #3: Fuel excise revenue has been white anted in large part because of the exemptions provided that have grown significantly in recent years. The trend towards more fuel efficient vehicles is also relevant. The impact of ~150,000 EVs out of 18M light vehicles is insignificant.
Fact #4: Governments have both revenue and costs. When considering how much revenue we need, we have to consider what the costs are ie budget 101.
BEVs (which are 90 per cent of EV sales) produce no tailpipe pollution. resulting in billions of dollars saved in health costs, billions of dollars in avoided carbon through lower lifecycle emissions, and arguably also billions of dollars in road safety savings due to EVs being equipped with advanced safety technology.
The above are all costs to government that are REDUCED due to EVs. By exactly how much? The first stage of national road tax reform must involve quantifying these savings for Australia over the coming 25 years.
Beyond costs there are also wider economic benefits due to EVs, including:
– Redirecting foreign fuel spending to buying Australian made energy (we spend more than $40 billion each year on foreign fuel for cars alone)
– Reducing the cost of living due to EVs being cheaper to run meaning that part of that circa $40 billion pool of fuel spending can be freed up to be spent elsewhere in the economy + pay down debt
– Support Australian energy jobs through the purchase of Australian-made energy
– Support Australian mining jobs through the use of Australian minerals to build and run EVs
– Support manufacturing jobs through the development of a local EV industry
After taking all of that into account, the fuel excise revenue gap looks rather trivial..
While national road tax reform should consider how to develop sustainable tax revenue for future governments, the core focus of reform should actually be on improving the efficiency of our transport system.
Governments won’t have to raise as much tax revenue if a national road pricing scheme targets the major transport costs of pollution, carbon emissions (fuel efficiency), traffic congestion and road wear (vehicle size).
Jake Whitehead is head of policy at the Electric Vehicle Council. This story is adapted from a post on LinkedIn with permission of the author.