South Australia to apply road tax to electric vehicles, other states may follow

The South Australian government will apply a distance-based charge to electric cars in lieu of fuel excise – a large portion of which goes into road funding.

South Australia is set to be become the first jurisdiction in the world to implement a unique tax on electric vehicles – and other Australian states could follow – if a proposal set down in yesterday’s state budget gets the go-ahead.

South Australian treasurer Rob Lucas said the proposed road user tax would initially raise close to $1 million annually, money the SA government said would be used for road maintenance. The tax is expected to come into effect from July, 2021.

“Someone has to pay for the road maintenance and upgrades and it should be the people using the roads,” Mr Lucas said in a media statement, adding that electric cars don’t contribute to government coffers via fuel excise.”

“It’s not for me to out the other states or territories, but I’m pretty confident that over the next 12 months at least one or two other jurisdictions will announce similar road user charges,” The Australian newspaper reported.

Currently, 42.3 cents from every litre of petrol and diesel sold at the bowser goes to the Federal Government. A portion of that – between 40 and 50 per cent in recent years – goes towards national transport infrastructure. The balance of fuel excise goes into consolidated revenue.

Under the budget proposal, owners of electric vehicles would pay a fixed annual levy on top of their registration as well as a distance-travelled charge, requiring drivers to keep and maintain a logbook – or provide odometer readings annually, at rego renewal time, for example.

Mr Lucas defended the new tax, adding the state government was projected to spend about $18 million on electric vehicle charging stations.

He added that he’d been in discussions with other states and territories about the proposed tax and said he expected other governments to follow South Australia’s lead. The New South Wales state government floated the idea of an electric vehicle tax earlier this year.

Electric Vehicle Council CEO Behyad Jafari said the proposed tax would act as a disincentive to electric vehicle take-up.

“While governments around the world are using every means possible to incentivise the uptake of electric vehicles, South Australia reckons they have it all wrong,” said Mr Jafari.

“If the revenue from fuel excise is falling because South Australians are burning less foreign oil, that should be considered a blessing,” he added. “Overall it’s good for air quality, it’s good for the health budget, it’s good for carbon emissions, and it’s great for economic sovereignty. The last thing any sane government would do is try to hit the brakes on this trend.

“It’s like responding to a drop in the tobacco tax take by slamming a new excise on nicotine gum.”

The Federal Chamber of Automotive Industries’ CEO Tony Weber accused the South Australian government of being the only government in the world to oppose the uptake of electric vehicles.

“The announcement this morning that the South Australian Government plans to introduce a road user charge for low and zero emission vehicles (LZEVs) is simply beyond belief,” said Mr Weber.

“All around the world, developed countries recognise the environmental and health benefits of low and zero emission vehicles. These countries encourage the uptake of LZEVs through incentivisation and the deployment of infrastructure.

“With its proposal to tax LZEVs through a road-user charging tariff, South Australia is discouraging the uptake of environmentally friendly motoring and is turning its back on the topic of Climate Change.

“We believe this charge will make South Australia the only jurisdiction in the world that actually opposes the uptake of low and zero emission vehicles.”

However, the car industry lobby group did concede a long-term strategy was needed to address the issue of zero emission vehicles and their contribution to the economy via a road-user charge.

“The automotive industry realises that excise, and the treatment of motorists and their vehicles, is a long-term issue,” said Mr Weber. “We recognise that road user charging is a complex topic that needs to be discussed in a holistic manner and on a national basis.

“But first, we need to have a sophisticated discussion about how we encourage the uptake of all low and zero emission vehicles into our marketplace. These vehicles offer the economy wide benefits, including improved health outcomes, and will make a major contribution to improving our environmental scorecard,” Mr Weber said.

It’s estimated about 50 electric vehicles have been reported as sold in South Australia so far this year (about 7 per cent of the 800 electric cars reported as sold nationally).

However, the overall market for EVs is growing, with sales up 25 per cent nationally in the 10 months to the end of October compared with the same period last year.