7 days ago
EV drivers to be hit with new road users charge
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The free ride enjoyed by drivers of electric vehicles is coming to a close with Treasurer Jim Chalmers and state governments fast-tracking plans for a new road-user charge.
The Treasurer has long flagged the development of a new road-user charge across Australia for drivers of electric vehicles to ensure EV drivers are contributing a fair share to road upgrades.
Now the government, state treasurers and industry experts are gathering to hold high-level talks on how a new road user charge will work ahead of next week's economic roundtable in Canberra.
All Australian motorists who buy petrol and diesel at the bowser pay 51.6 cents a litre in fuel excise.
Based on a planned NSW road user scheme, a national rollout will depend on your mileage but might cost between $300 and $400 a year.
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A new charge could be coming for EV drivers in Australia. Picture:NSW officials have forecast $73 million in revenue from the road-user charge for the 2027-2028 financial year – increasing to $141 million the following 12 months.
The Infrastructure Partnerships Australia road-user charging forum in Sydney this week will include officials from the NSW and Victorian Treasury departments, the Productivity Commission, Transurban chief executive Michelle Jablko and Australian Automobile Association managing director Michael Bradley.
Victorian Treasurer Tim Pallas said that electric vehicles are 'heavier and do more damage to the road network as a consequence than do internal combustion engine vehicles'.
'But there's an environmental plus to electric vehicles,'' he told The Australian.
'So getting that balance right was key to us. The way we figured it, (a road-user charge) came in about half of the equivalent costs of fuel excise and that's not counting the incentives the state was putting into the vehicle purchase or registration for low-emissions vehicles,' Mr Pallas added.
The Productivity Commission has urged the Albanese government to take action over declining fuel excise revenue amid spiralling rising maintenance costs.
'By giving drivers a clear signal about the cost of infrastructure, they would have an incentive to use it more efficiently,' the Productivity Commission report said.
The Treasurer has made no secret of his support for a shake-up of the current system before the election, raising the idea with business leaders in February.
'We will also continue to work with states and territories on the future of road-user charging,'' Dr Chalmers said in June.
'All of this represents a big agenda on the supply side of our economy. None of these reforms are simple.'
A new charge could be coming for EV drivers in Australia. Picture:How does fuel excise work?
The current rate of fuel excise is 51.6 cents in excise for every litre of fuel purchased.
For a typical household with a car running on petrol, the tax costs more than $1200 a year.
But the flat sales tax isn't paid by drivers of pure electric vehicles, who simply need to plug in their cars to recharge.
While registration and driver's licence fees go to state and territory governments, fuel excise is collected by the federal government.
Australian motorists paid an estimated $15.71 billion in net fuel excise in 2023-24, and are expected to pay $67.6 billion over the four years to 2026-27.
However, governments have long-warned that a road-user charge will be required to fill the gap in the budget left by declining revenue from the fuel excise, as the petrol and diesel engines in new cars consume less fuel and Australians adopt hybrid and electric cars.
What does the AAA say?
The Australian Automobile Association (AAA) is calling for a national approach to road-user charging but wants a guarantee the revenue will be earmarked for road upgrades.
The AAA backs a distance-based road-user charging as a fairer and more equitable way to fund land transport infrastructure.
The 2024 federal budget forecasted a reduction in fuel excise receipts by $470 million over four years from 2024-25.
Federal Treasurer Jim Chalmers is fast-tracking plans for a new road-user charge. Picture: NewsWire / Martin Ollman
Roadblocks to reform
Currently, New South Wales is the only state with firm plans to introduce a road-user charge from 2027 or when EVs reach 30 per cent of new car sales.
Plug-in hybrid EVs will be charged a fixed 80 per cent proportion of the full road-user charge to reflect their vehicle type.
Western Australia has also stated an intention to implement a road-user charge.
Meanwhile, Victoria's electric vehicle levy had to be scrapped following a ruling from the High Court.
Two Victorian electric car owners launched a legal challenge on the basis the tax was not legal as it was an excise that only a federal government could impose.
They won with the High Court upholding the legal challenge.
There have been several false starts to enshrine a road-user charge including in South Australia, where the former Liberal Government planned to introduce a charge for plug-in electric and other zero emission vehicles, which included a fixed component and a variable charge based on distance travelled.
It was later pushed back to 2027 due to a backlash before the legislation was ultimately repealed.
'Gold standard' for reform
Some experts argue the gold standard for reform is a variable rate that factors in the vehicle's mass, distance travelled, location, and time of day.
But there's a big barrier to the Commonwealth imposing those charges because the Constitution prohibits it from imposing taxes that discriminate between states or parts of states.
State governments could impose those levies, but as the experience of the Victorian Government underlines, it is legally complex.
Originally published as Plans being fast-tracked for new road user charge for EV drivers
