Victoria’s EV tax policy ‘worst in world’


Denham Sadler
Senior Reporter

A group of manufacturers and industry groups have slammed Victoria’s proposed tax on EV owners as the “worst electric vehicle policy in the world”, and called on the upper house to reject it.

In a full page ad in The Age newspaper on Thursday, organisations including Uber, Hyundai, Volkswagen and Environment Victoria said the levy, which would be 2.5c per kilometre for owners of electric vehicles, would make it far more difficult for Victorians to purchase the vehicles and make the state an outlier around the world.

“Most industrialised countries are prioritising incentives for electric vehicles to benefit from cleaner air and new jobs from a growing industry. This new tax means the world’s manufacturers are far less likely to send Victorians their best, most affordable, zero-emission vehicles,” the letter said.

Parliament House Melbourne, VIC
Spring Street: Victoria’s EV tax plan labelled “worst in the world”

Other groups to sign on to the letter include the Clean Energy Council, the World Wide Fund for Nature and the Australian Conservation Foundation.

The organisations said that no other jurisdiction in the world has introduced such an electric vehicles tax without accompanying it with a range of incentives to encourage the purchasing of the vehicles.

“No other jurisdiction in the world has introduced such a targeted tax on electric vehicles, without significant incentives to entice drivers. Going it alone will mean Victoria has the worst electric vehicle policy in the world,” they said.

In November last year the Victorian government announced plans to introduce a road tax for electric vehicles from July. This is expected to raise about $30 million over four years, and will set EV owners back up to $300 per year.

Electric vehicle owners will have to keep a log of their driving, with this info used to calculate how much tax they will have to pay on this when they renew their registration. These records will have to be kept for five years.

The move has been widely criticised by the industry, vehicle manufacturers and climate change organisations, which argue it will disincentivise the use of electric vehicles, coupled with a lack of a coherent national strategy.

It has also been labelled “premature”, with electric vehicles only accounting for 0.7 percent of the market in Victoria.

Victorian Treasurer Tim Pallas said the tax is a way to ensure roads can be maintained as the growth in electric vehicles continues.

“What that would mean is more and more weight will fall on the back of everyday motorists using petrol engines. So in practical terms, the best time to start with that base system is as soon as you can,” Mr Pallas said.

The legislation is set to be debated in the Victorian upper house next month, with the state government needing to win the support of at least three crossbenchers. Reason Party leader Fiona Patten has said she will only support the tax if a number of other incentivises for the purchasing of electric vehicles are passed.

In the open letter, the signatories called on the crossbenchers to reject the tax.

“Members of Parliament, please vote against this EV tax and vote for cleaner Victorian roads and stronger climate action. Victoria, don’t pull the handbrake on electric vehicles,” they said.

At a federal level, Greens Senator Janet Rice has introduced a private members bill which would mean that if a state government imposed a tax on electric vehicles, that jurisdiction would lose the equivalent of that tax in its GST revenue. This would then be distributed to the other states.

“This bill provides a clear route for the Commonwealth to undo the state taxes on electric vehicles, ensuring that state governments don’t impose them unfairly, at exactly the wrong time, when we need to be encouraging uptake of electric vehicles,” Senator Rice said.

“This is a basic step, to ensure we’re not putting roadblocks in front of electric vehicles.”

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