The Australian Automobile Association (AAA) is again calling on the Federal Government to implement a nationally consistent road user charge for electric vehicles.
A couple of weeks ago, the South Australian Government announced its intentions to introduce a road user charge for plug-in electric and zero emission vehicles, a proposed tax that met with significant opposition. This was followed by some noises from within the New South Wales government to do the same.
Then on Saturday, Victorian Treasurer Tim Pallas announced plans to introduce a 2.5 cent/km charge that would apply to electric and other zero-emission vehicles, and a 2.0 cent/km charge for plug-in hybrid-electric vehicles.
The AAA, whose constituent auto clubs include NRMA, RACV, RACQ, RAA, RAC and RACT, has supported the Victorian Government’s move, but says a national approach needs to be taken and that revenue collected should support rollout of “ultra-low fuel consumption technologies and infrastructure”.
“The Federal Government must step in and ensure tax changes are nationally consistent, equitable, and progressed in a manner that does not disincentivise technological transition,” AAA states.
What the AAA doesn’t grasp is that any additional cost on an already expensive purchase is a disincentive, particularly a significant ongoing cost. Electric vehicles still have some way to go before they are broadly purchase cost competitive with internal combustion engine (ICE) vehicles.
As we saw in the early days of solar power, upfront costs can be a huge barrier to uptake. But in the case of solar, buyers weren’t taxed – they were and continue to be subsidised. This led to Australia become the home solar superpower it is today – and that is benefiting everyone.
The AAA also mentions terms such as “progressed” and “initially at a discounted rate” regarding an electric vehicle usage tax, which would create fear among potential EV buyers such charges could get out of hand.
VIC EV Drivers To Pay More Than ICE Users?
According to the Australian Bureau of Statistics’ Survey of Motor Vehicle Use, Australia covering the 12 months ending 30 June 2018, there were an estimated 19 million registered motor vehicles in Australia during that period and in total these vehicles travelled an estimated 255,031 million kilometres – an average of 13.4 thousand kilometres per vehicle.
I have no idea what distance the average electric car driver travels in a year, but at 13,400 kilometres that would result in an EV road use tax cost of around $335 annually under Victoria’s scheme.
AAA Managing Director Michael Bradley says:
“The technological shifts we’re seeing in the car market are good for consumers and the environment, but they are also going to significantly undermine the federal budget and its reliance on fuel excise revenue to fund transport projects.”
The AAA notes October’s federal Budget shows the average Australian household will contribute $1,188 in fuel excise alone this financial year. What the AAA (again) doesn’t note is of fuel excise paid, only around a quarter goes towards transport projects and the rest into general revenue. Of that $1,188, around $297 would go towards paying for roads and related infrastructure.
Based on Victoria’s proposed electric vehicle tax and assuming an EV driver covers the average kilometres, that driver would be paying more from than that from the get-go.
Something else the AAA doesn’t acknowledge in its release beyond stating EVs are good for the environment are the costs avoided through the use of electric cars. SQ’s Ronald has previously estimated just the environmental and health costs associated with emissions from petrol and diesel at around 84 cents per litre; far more than the fuel excise collected at that point in time (around 40 cents).
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What is the motivation on the AAA to push for this?, they don’t get any of the revenue, it is the government that benefits
If I charge my EV solely from the sun, does that mean that Governments have finally worked out a way to tax sunlight?
So, the revenue goes to pay for the roads I am driving on? If so, then given the percentage of fuel tax (and we can now include sunlight as a fuel) quoted in the article above, our roads should be 4 – 5 times better than they are.
Do we “get what we pay for”?
I am surprised the NRMA is backing this. And disappointed.
Michael Bloch,
You state: “What the AAA doesn’t grasp is that any additional cost on an already expensive purchase is a disincentive, particularly a significant ongoing cost. Electric vehicles still have some way to go before they are broadly purchase cost competitive with internal combustion engine (ICE) vehicles.”
Perhaps a post- ‘peak oil’ supply world (that most people seem to be oblivious about or ignoring) will upset the current paradigm, and soon?
Recently, I came across a piece by Blair Fix headlined “Peak Oil Never Went Away”, dated Nov 16. It includes a reference to a 2004 published study by John L Hallock Jr. et. al. titled “Forecasting the limits to the availability and diversity of global conventional oil supply”.
Figure 5 in the Blair Fix piece shows an overlay of historical global ‘conventional’ oil production (blue curve) and the 2004 Hallock et. al. projection (red curve). FIx says:
“Perhaps the most rigorous prediction (to date) for conventional oil production comes from John Hallock Jr. and colleagues. In 2004, Hallock estimated the conventional oil reserves in all of the major oil-producing countries. Based on the range of these estimates, Hallock then created different scenarios for future oil production. In 2014, Hallock and colleagues revisited these scenarios to see which one was correct. Global oil production, they found, was following the low-end estimate. Figure 5 shows Hallock’s low-end model. It’s shockingly accurate. For the last 20 years, the model has predicted the global production of conventional oil to within 2%.
The real test for Hallock’s prediction will come in the next few decades. If the model is correct, we’re on the precipice of an oil-production collapse. By 2040, the model predicts that we’ll be back to 1960-levels of oil production. But by then, the oil will be used by 3 times the population.”
See: https://economicsfromthetopdown.com/2020/11/16/peak-oil-never-went-away/
1960-levels is less than half of current (2020) production levels.
I’d suggest humanity needs to leave oil before oil leaves us.
BEVs help in achieving this goal, so why make it more difficult to transition?