10 reasons why Labor’s proposed EV-only Road User Tax is bad policy

Driving with one foot on the accelerator and the other foot on the brake isn’t recommended.

Accelerating action to mitigate climate risk at the same time as taxing those who are doing the heavy lifting on electrifying transport is similarly foolish.

The proposed Road User Tax is a political dog-whistle that will have the fossil fuel industry laughing all the way to the bank.

Here are 10 reasons why the proposed Road User Tax is bad policy.

1/ – It’s based on the false assertion that EV drivers “don’t pay their fair share”. In reality, EV drivers, like all vehicle owners, pay vehicle registration taxes and driver licence fees. These taxes directly support state governments in maintaining roads. Additionally, like all homeowners, EV drivers pay local government rates that fund council road maintenance.

2/ – It relies on the false assumption that fuel excise funds roads. It doesn’t. Fuel excise has gone into general revenue, not earmarked for road funding, since 1992.

3/ – It contradicts efforts to simplify Australia’s tax system. The 2025 Economic Reform Roundtable emphasised the need to streamline taxation. Introducing a Road User Tax creates an unnecessary and inefficient new tax when registration and license fees already exist. We don’t need another cumbersome bureaucratic system, especially one that would incur significant new compliance costs to control rorts and avoidance.

4/ – EV drivers contribute to improved public health, reducing government healthcare costs. A new study from the UTAS Centre for Clean Air attributes 1,800 premature deaths annually in Australia to traffic-related air pollution—more than the annual road toll. Those who help clean up our air and reduce respiratory diseases such as asthma deserve gratitude, not penalties.

5/ – EV drivers enhance road safety through advanced technology. Advanced Driver Assistance Systems (ADAS), which are most sophisticated and effective in EVs, help reduce the road toll. This is significant, as road accidents cause grief, disability (increasing NDIS costs), and lost productivity. Road safety will improve further when fully autonomous vehicles make instantaneous driving decisions, unlike weary, impatient, or impaired human drivers.

6/ – EV drivers help reduce climate-damaging emissions. This is critical for mitigating extreme weather events like wildfires, floods, and droughts. These events drive up insurance premiums for everyone and increase demands on national emergency funding.

7/ – EV drivers bolster national security by reducing reliance on imported fossil fuels. A widespread disruption to fuel tankers—similar to the Houthi attacks on Red Sea and Gulf of Aden shipping lanes—could cripple our fuel imports and our ability to transport civil defence units, armed forces, food, and agricultural goods. Australia’s dependence on fuel imports is alarming, and is especially foolish when we have abundant solar and wind resources for energy self-sufficiency.

8/ – As a wealthy nation, Australia must lead global climate efforts. Electrifying transport is a key component of ambitious emissions-reduction targets. Policy should accelerate EV adoption, not hinder it with new taxes. Particularly egregious is the suggestion that EV trucking should be the first target of a Road User Tax. Replacing dirty diesel trucking with EV semis and delivery vans needs to be a priority for incentives, not for a new tax.

9/ – Autonomous EVs such as robo-taxis will decongest cities over the next decade. Fewer private vehicles will need to enter cities and find parking, boosting productivity. Transport taxes should support this transition, not obstruct it. Private cars sitting in car parks on prime city real estate all day long is the antithesis of productivity.

10/ – EV drivers already pay significant taxes. These include GST on electricity for charging, GST on the higher initial cost of an EV, as well as Luxury Car Tax for premium EVs. Frankly, the assertion that EV drivers “don’t pay their fair share” is offensive.