Australian EV Tax is counterintuitive and counterproductive to our goal of a sustainable future

Australian EV Tax is counterintuitive and counterproductive to our goal of a sustainable future

Less than 1% of new car sales in Australia are EVs. Compared to other similarly developed economies, we don’t even find ourselves in the top 20 list.

I love this country, but for a place that is well recognised as being home to early adopters and lovers of technology, we’re not just falling behind, we’re not even in the race.

With adoption well behind where it should be, the last thing you’d want to do is to introduce a new tax on electric vehicles, as this would reduce one of the biggest selling points of EVs, the dramatically lower costs per km, when compared to an ICE vehicle.

New South Wales EV Tax

Way back in March, NSW Treasury secretary Michael Pratt confirmed tax measures for electric cars were being considered, however at that stage, the policy was in its early days.

South Australia EV Tax

Come November 11th and South Australia’s Treasurer Rob Lucas, announced they would introduce a new tax on EVs starting as soon as July 1, 2021.

Victoria EV Tax

Most recently was the Victoria Treasurer, Tim Pallas, who on November 21st, Saturday afternoon, when all important announcements are made, announced his support for an EV tax from July 1st, 2021.

The announcement (which is not yet on the treasurer’s website), features the headline ‘VIC TREASURER ANNOUNCES HISTORIC REFORM WITH EV ROAD USER CHARGING PROPOSAL’ on the website of Infrastructure Partnerships Australia.

IPA is an infrastructure industry think tank who has a dedicated page on its website that highlights their vision for Road User Charging for Electric Vehicles.

That page features the following suggestions:

  • A per-kilometre charge should be set or capped to ensure electric vehicle motorists pay no more than those paying fuel excise
  • Governments may wish to provide a time-limited discount period to encourage uptake and provide certainty for prospective electric vehicle buyers
  • Charges could be the same or different across states and territories, but should be based on the same methodology and a compatible approach
  • The charge should capture all vehicles with manufacturer-rated fuel use below 1 litre per 100 kilometres
  • The charge should be indexed in line with inflation
  • Funds raised should be retained in the jurisdiction they are raised and reinvested in maintenance and new transport capacity
  • Motorists should submit (or vehicles transmit) odometer readings every six or 12 months
  • Charges could be the same or different across states and territories, but should be based on the same methodology and a compatible approach

Interestingly, at no point during this release do we actually get quotes from the Victorian Treasurer, instead, we get emotive and controversial statements made by Infrastructure Partnerships Australia CEO, Adrian Dwyer.

“Today, Treasurer Pallas delivered one of the most important reforms in a generation.

For decades politicians and policy makers have talked about modernising the way we fund our roads, but today Treasurer Pallas acted.

At its heart, this reform is about fairness. It’s not fair that right now a family in a Mazda or Kia is paying to use the roads while a millionaire in an electric Telsa, Porsche or Jaguar gets a free ride.

Other countries and states around the world, including New Zealand, California, South Australia, Oregon and Utah have already moved to introduce comparable mechanisms and pilots to help future-proof the way they pay for road building and maintenance.

Applying a simple distance-based charge on Electric Vehicles will ensure every motorist makes a fair and sustainable contribution and will help secure a vital stream of transport funding for generations to come.

While a shift to Electric Vehicles could deliver many environmental and health benefits, they don’t levitate, and should be paying to use the roads like everyone else.

Any argument that suggests this proposal is anti-EV is just plain wrong. As Treasurer Pallas has shown we can support the uptake of Electric Vehicles while also creating a fairer funding approach.

Independent modelling by EY shows definitively that a modest road user charge like that announced today, will not retard uptake of Electric Vehicles – which will still be cheaper to own and run than a petrol or diesel option.

With South Australia and Victoria leading the way and NSW indicating it will soon follow, we now have bipartisan support across liberal and labor states for a modern road funding system. We look forward to other states and territories also seizing this once-in-a-generation reform opportunity.”

Problems

Firstly, it seems strange for any Treasurer to allow a third-party organisation to speak on their behalf.

Pallas hasn’t posted about the controversial EV tax on his Twitter account (@timpallas), in fact, he hadn’t posted at all since October 22nd, until he took the time last night to leave a reply about socks.

Secondly, I take issue with a number of the claims in this statement, which are clearly miss-informed.

I really take issue with the comment about EVs being for millionaires. The reality is far from the truth. The Tesla Model 3 is by far the most successful EV in Australia. In Victoria, that car starts at A$72,262 driveway. Included in that price is $2,882 in Stamp Duty.

If you spec out all the options (including FSD) your drive away price is A$121,552. Included in that cost is $9,720 of GST and a massive $8,808 in Luxury Car Tax, as well as $4,864 in Stamp Duty and another $238 for Registration and $532 for Compulsory Third Party Insurance. That’s a total of A$24,162 in taxes and fees, so don’t let anyone tell you EV owner isn’t paying their fair share.

From the data collected on the Tesla Model 3 Australia Facebook Group, most owners upgraded from vehicles worth between a half to a third the price of a Model 3. This means they wanted this EV so badly, that they found a way to stretch financially to afford the car, these are not millionaires, rather people often on much less than A$100,000 per year.

By now, most techAU readers know this, but it’s worth reiterating. Personally, I saved my ass off to buy my Model 3 and when the price came in higher than expected in Australia I took the decision to refinance my home to free up equity to buy the car.

Are there millionaires that by electric vehicles? Of course, but most people are on modest incomes, but realise the benefits of ownership. What’s important to remember is that we’ll all be electric vehicles one day.

As the list of countries banning the sale of ICE vehicles continues to grow, automakers will have no option but to switch to manufacturing zero-emission vehicles (typically electric) or be out of business. Given Australia imports their vehicles, your next car may indeed be an EV.

This means when we have conversations about taxing people driving electric vehicles, we’re really talking about introducing a per kilometre tax on all Australians, placing a handbrake on adoption, when we need to push firmly down on the accelerator.

The real detail on these proposed taxes are yet to be revealed to the public, but the devil will certainly be in the detail. Don’t forget delivery vans, trucks and other parts of the logistics chains will all transition to electric vehicles, so adding a per km charge would increase the costs of goods getting to your house unless commercial vehicles were excluded.

There are also some pretty fundamental flaws in charging people based on the suggested odometer reporting. If you’re a home owner, you already pay for road maintenance of local roads through your rates. But what about the distance you travel on private roads and long driveways, commercial carparks etc. Don’t forget about tollways, that already charge you for travelling on that road, are you now expected to pay twice?

Some have suggested GPS tracking, however that would never pass the privacy concerns, as demonstrated recently with the sensitivity around the Covid Safe app.

The budget

Notice how these policies are being thrust upon us, not from the environmental minister, but instead the treasurers of each State. It’s safe to say that the Coronavirus has devastated most state and the national economy, so I understand the want to improve the bottom line.

As Australia continues down the road of adopting electric vehicles, moving away from ICE vehicles over the next 10-15 years, Governments will see a decline in revenues created by the fuel excise.

What’s not really well understood is that the fuel levy actually applies to a wide range

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