11-08-2025
Environment minister says 'it's no secret' new road user charge in the works
There is a growing expectation that the "free ride" enjoyed by EV owners in Australia is about to come to an end. As the federal and state governments grapple with the implications of Australia's transition to electric and hybrid vehicles, a new road fee could be aimed at those who have embraced the technology.
Federal Treasurer Jim Chalmers has previously foreshadowed the need to make sure all road users are paying their fair share. But drivers who have switched to electric cars have avoided the now 51.6 cents per litre tax on petrol and diesel that helps fund roads and infrastructure. The tax, which drivers pay at the bowser, was just increased last week as the excise is indexed to rise with inflation twice a year.
But as a result of the growing number of EVs on our roads, the declining government revenue from the fuel excise has meant an alternative was always likely coming down the pike.
Federal Environment Minister Murray Watt was asked on ABC on Monday morning about expectations the government would soon introduce the EV road user charge. While he wouldn't be drawn on what that would look like, he said it was "no secret" the government was consulting about it.
"I wouldn't want to jump ahead of any sort of decision-making with that," he told ABC News Breakfast this morning. "It's no secret that we've said previously we'll work with the states and territories on this matter."
Related: EV boss calls out Aussie loophole as potential tax change looms
The Victorian Government previously introduced a road user charge on electric and plug-in hybrid vehicles, but it was scrapped in 2023 after the High Court ruled it was a "duty of excise" that only the Federal Government has the power to impose.
"You'd be aware that there was a High Court decision which really raised this issue front and centre and ever since then, we've been working with the states and territories," Minister Watt said.
"But it's probably premature to say exactly what will occur" with the expected new road charge.
The line of questioning came after The Australian on Monday reported that Treasurer Jim Chalmers was accelerating work on a modest road user charge for EV drivers. As the federal government embarks on an economic reform roundtable this month aimed at boosting productivity and improving the tax system, the issue is reportedly on the agenda when he sits down with state treasurers.
According to the Electric Vehicle Council of Australia, there are more than 300,000 EVs on our roads, with a majority of them fully electric.
Many questions remain about new road charge
Revenue from the fuel excise has actually been declining since 2005 — long before EVs were common — because modern cars are more fuel-efficient and require less petrol to travel the same distances.
Swinburne University's Hussein Dia supports the slated introduction of an EV tax, but argues any new road charges could be applied more broadly to all vehicles, not just electric ones. Existing road taxes are becoming outdated and fail to reflect the real costs of driving, such as congestion and pollution, he told Yahoo News recently.
While car registration fees are fixed and don't account for how much a vehicle is driven or the impact it has on traffic and emissions, there are more precise ways than the fuel excise to charge drivers for how much they use the road. And the introduction of an EV road charge could be the right time to explore them, he argued.
"The best approach — proven in numerous studies — is to charge based on how much a person drives," he said. "If you travel more, you pay more. That's similar to how fuel excise works, but it's more targeted and fairer."
The fuel excise doesn't differentiate between driving on a congested city road versus a quiet rural highway, nor does it account for the heavier impact of trucks on road wear and tear, he added. A road-user charge could theoretically be more precise by charging based on when, where, and how much a person drives.
Logistical challenges and major questions for how such a tax would be implemented remain. Possible solutions include toll transponders — like those used in Singapore — or GPS-based systems to track vehicle use.
Infrastructure Partnerships Australia has also thrown its support behind a distance-based tax for EV motorists but there is expected to be intense debate about the potentially outsized impact for those in regional Australia and possible carve outs or rebates.
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