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AAA backs renewed calls for EV road tax

Not fair: Those in support of the user-payers road tax proposal say EV owners “don’t pay their fair share”.

Proposed EV road tax gains support from AAA and NSW as fuel excise ages

3 Jul 2020

A ROAD-USER charge for drivers of electric vehicles is back on the national agenda as a thinktank organisation pushes the distance-based tax as a fairer method for motorists and governments – and the New South Wales state treasury agrees.


The recommendation to overhaul the road tax system was included in this week’s draft ‘Report of the Review of Federal Financial Relations’, headed by CSIRO chairman and former Telstra CEO David Thodey.


Thinktank Infrastructure Partnerships Australia (IPA) made its proposal of a road tax for EVs in November last year and has been used as the basis for taxation reform in the federal financial relations review.


Having been mooted for several years now, the tax was the subject of a proposal by the Australian Automobile Association (AAA) in 2019 and aims to replace the current fuel excise policy which will eventually become obsolete as numbers of fossil-fuel vehicles decline.


The AAA this week said it fully supported the review.


Some $20 billion in revenue was generated last year by the current set-up in which Australians pay 42.3 cents a litre for unleaded and diesel and 13.4 cents per litre for LPG.


IPA CEO Adrian Dwyer said a tax based on the distance travelled by an EV was the fairest method for motorists. 


“Applying a road-user charge on EVs is a smart, future-focused decision because as more electric vehicles take to the roads there will be less money to pay for those roads,” he said.


“Right now, a person driving a petrol car is paying fuel excise at the pump, while EV drivers don’t pay their fair share to drive on the roads.


“Applying a simple distance-based charge to EVs will ensure every motorist makes a fair and sustainable contribution to the use of the roads and will help secure a vital stream of transport funding for generations to come.”


Mr Dwyer also said any new tax system would not detract from EV uptake. 



“In fact, a road-user charge can provide certainty to prospective electric vehicle owners about future costs and be set at a rate equivalent to fuel excise,” he said.


According to Mr Dwyer, fuel excise is in “terminal decline” while the total number of vehicle kilometres travelled is growing. 


“This trend started many years ago as vehicles became more fuel efficient and is set to fall off a cliff as a wave of electrification hits,” he said in the IPA report.


“What has emerged gradually as an increasingly unsustainable tax – and one that is unfair for many users – will very quickly become untenable as those who cannot afford an EV must foot a growing road bill for those who can.”


He also said Australia was “at the perfect moment in the technology cycle”.


“While EVs still only represent a small fraction of new-car sales, the future of our light-vehicle fleet is electric,” he said.


“Once there is an electric car in every street, the opportunity will be lost.”


In February last year, GoAuto reported that the AAA’s then newly-launched policy platform called on both sides of federal politics to commit more heavily to transport infrastructure and a major reform, including the move to a user-pays road access charge, starting with electrified vehicles.


It also called for a commitment prior to the 2019 federal election in May to have a new land transport white paper finalised by the end of last year.


The AAA this week said it welcomed the renewed calls for state and federal treasurers to bring EVs into a road-user charge system.


It said EVs did not contribute towards the cost of roads in Australia in the same way that millions of other motorists did with the current 42.3c/litre system.


AAA managing director Michael Bradley said his association advocated a staged process of reform that brought EVs and other ultra-low fuel-consumption vehicles into the tax system so that all motorists were contributing their fair share to the cost of roads.


“The AAA advocates that EVs are brought into the tax system at a discounted rate to avoid disincentivising their take-up,” he said.


“We also ask governments to consider apportioning revenue from EV road-user charging to future government programs that incentivise development and rollout of ultra-low fuel-consumption technologies and infrastructure, such as charging stations.”


Mr Bradley said that with declining revenues from fuel excise, there would need to be broader reform of road-user charging models. 


“This has also been recognised in today’s report which is also welcomed by the AAA,” he said.


He said the AAA’s constituent clubs – NRMA, RACV, RACQ, RAA, RAC and RACT – were 

major investors in EV charging networks.


“We see a terrific future for all forms of ultra-low fuel consumption technologies,” he said.


“But we also know that motoring taxes need to be both fair and sustainable into the future, with everyone paying their way.”

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