The debate over road-user charges (RUC) for electric vehicles has been reignited courtesy of interpretation of comments reportedly made recently by Treasurer Jim Chalmers.
There have been several attempts at introducing an EV road user “tax” on a state-level basis. Back in 2020 in South Australia, the then-Marshall Government intended introducing a charge for plug-in electric and other zero emission vehicles consisting of a fixed component and a variable charge based on distance travelled. It was to be introduced in 2022, but was then pushed out to 2027 due to backlash. In 2023, the legislation was repealed.
The Victorian Government had more luck getting an EV road user tax over the line – for a while. In November 2020, then-Victorian Treasurer Tim Pallas announced his plans, which were labelled the “worst EV policy in the world” and an “ill-conceived anomaly of a tax.” Still, the Zero and Low Emission Vehicles (ZLEV) Road-User Charge went ahead until a High Court ruling in 2023 found it amounted to an excise, which states are forbidden from collecting. The Victorian Government had to repay affected drivers.
Enter Jim Chalmers
States can’t collect excises, but the Federal Government can. And it seems Treasurer Chalmers could be giving serious thought to an RUC for electric vehicles; based on the perceptions of some regarding comments he made at a private dinner event with business leaders last week, reported by AFR.
Treasurer Chalmers previously referred the design of a road user charge to the national cabinet in 2023, but that went nowhere.
In follow-up comments from the Treasurer’s spokesman to AFR, Dr. Chalmers was said to be just restating a previous view at the dinner; but states and territories would be involved in developing related policies and it will be done in a “considered and consultative way” that takes the time to get it right.
That’s of course assuming the Albanese Government is re-elected. And perhaps Treasurer Chalmers wasn’t just thinking about EVs.
Revenue from fuel excise is dropping in terms of share of tax revenue. According to the Parliamentary Budget Office (PBO), the proportion has been declining for decades due to increasing fuel efficiency and higher fuel prices; along with the rise and fall of Australian crude oil production in the 1970s and 80s.
Beyond a recovery after the end of temporary fuel excise cuts during the pandemic:
“… it is likely that excise will continue to be eroded by factors such more fuel-efficient vehicles and increasing take up of electric vehicles (on and off public roads),” said the PBO in 2022.
And fuel excise revenue isn’t exclusively assigned to roads. According to the Australian Automobile Association (AAA), over the decade to 2022-23, only 57% of fuel excise was reinvested in land transport projects. The PBO says between 2005-06 to 2019-20, the ratio of Australian Government road spending to fuel tax revenue averaged around 30%.
AEVA: Road User Charges Should Apply To *All* Vehicles
A few days before this dinner event, the Australian Electric Vehicle Association reiterated its stance that any future federally collected RUC must apply to all road-going vehicles, including heavy vehicles, regardless of fuel source. It is advocating for a universal mass x distance road user charge to ultimately replace fuel excise.
An options paper recently released by the AVEA says the rate levied should *eventually* be equivalent to what the fuel excise would have ordinarily collected. It proposes:
- 3 c/t*km for light vehicles (<4.5 tonnes).
- 0.2 to 0.5 c/t*km for heavy rigid and heavy articulated vehicles respectively.
… and indexed with inflation.
The options the Association has put forward for implementation:
- Option 1: A staged introduction of the universal mass x distance RUC, starting at a very low rate but increased annually.
- Option 2: Remove fuel excise and introduce a full RUC on all vehicles as early as 2025.
- Option 3: Implementation of a RUC on EVs only, at a rate equivalent to that of fuel excise, with fuel excise remaining in place.
Of the three options, AEVA believes option 1 is the most effective.
Dr Chris Jones, National President of the AEVA, believes Australia’s EV drivers can recognise the need for reforms to road costing.
“We just want to ensure that it’s fair, doesn’t discourage EV ownership, and sets the nation up for the future.”
But whether EV and ICE owners consider the AEVA’s proposal as fair remains to be seen.
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I think we need a complete rethink of Road User Charges. We should keep the fossil fuel excise in place because we need to discouraged.its use due to climate change and the risk associated with such a heavy reliance on liquid fuels which are all imported.
We should then look at a road user charge that is based on road damage. Road damage is based on weight and distance travelled. A simple over and under 4.5T metric is not enough. I have a light truck that is 6.5T GVM about twice that of a heavy 4wd (which is registered as a car.). It should not be lumped in with a 40T truck the same as a heavy 4wd should not pay the same a light city car.
Estimates vary but heavy track can cause between 10,000 and 50000 times as much road damage per km than a light car. Its about time that cost was passed on to those users.
Whether climate change is real, whether reliance on liquid fuels has any impact on this, and whether ICEV owners will be prepared to pay yet more taxes when they’re already double taxed is open to debate. Odds are some ICEV owners would rethink their vote if they knew it’d mean paying more.
As regards road charges based on weight, vehicle weights are known, cargo varies. Why couldn’t the road tax simply be vehicle weight x charge rate?
Of course that would penalise EVs which weigh more than ICEVs, but then weight does more damage. Some even weigh more than ginormous America pickup trucks!
Climate change is real. Surely that is no longer open to debate.
I’d be in favour of a universal RUC and a reduction in excise.
Certainly climate change is real. I’m thinking of places like Los Angeles and the fires of a couple of weeks ago or the current flood destruction in North Queensland to name but two instances. Whilst it may be difficult to prove climate change is linked to any specific weather event, it is impossible to prove it is not, and common sense would assume that there be a link and we should act accordingly.
Notes from the moderation team
In it’s most basic from, anthropogenic climate change is putting a blanket on the planet that traps more heat.
Putting more heat energy into the system makes it more volatile, prone to bigger swings, with bigger extremes, at both ends, more often. Generally things get warmer but the droughts are drier and the floods are deeper.
The main problem is the Anthropocene is forcing the speed of change 100 time faster than anything seen in the fossil record.
What we’re seeing is perfectly predictable consequence of inaction over the last 50 years. It’s got little to do with back burning, arson or today’s government.
However what George has written below is also a perfectly predictable consequence of what happens when science is attacked and media is cowed or bought off, while education and critical thinking is in decline
Actually LA is widely seen as the result of Democrat decisions, and possibly some arson. Climate change really had nothing to do with it, except apparently in the minds of Albanese and his supporters.
Likewise I’m not aware of anyone, until now, even claiming climate change as responsible for North Queensland. They’ve have rain and floods before.
Common sense dictates that if people have seen the like before then it’s nothing exceptionally new. What may be new is people living in affected areas that were previously merely high risk. What definitely is new is government handling of issues.
Given the moderation note this probably won’t be posted but …
The moderation note is grossly misleading – the first and second paragraphs refer to climate change, not anthropogenic climate change. What’s the difference? Anthropic means relates to or concerning humans, so in this context humanity would be to blame for the climate change. If for instance the sun were responsible for climate change then it would not be anthropic climate change, but the simple explanation given obscures this.
Science as a whole is not under attack, indeed it remains a respected field. The issue is slivers such as the climate change debate – there’s no real debate about rocket science, nuclear physics etc. As for the media being cowed or bought off, honestly I’ve never seen that, though I have seen the reverse – entire publications stating they refuse to tolerate views that don’t adhere to the anthropogenic climate change view. Scientific debate? Pfft! Nobody wants that!
As for education and critical thinking being in decline, actually I quite agree. Is that a surprise? How many these days actually get a good education? How many pursue tertiary studies that encourage critical thinking rather than ideological regurgitation? How many do post-grad? And of these, how many are required to show ideological purity of thought rather than actual critical thinking?
As I say I doubt this’ll pass the moderators, but I might be surprised.
Hi George,
Firstly I’d like to say thanks for adding your voice.
We’ll all agree things, we’ll differ on others but we must remember to be civil about it, so again, thanks for being mature, realistic and detailed.
I try keep things on topic, not to censor, but equally some of the moderation team take a harder line and they will rightfully clean house without apology. We need this focus from time to time.
To be honest having spats here wont change hearts and minds, so we shouldn’t waste time arguing or writing posts that only get binned.
I recently read a useful quote,
“You simply have to observe how somebody stacks a dishwasher to be assured you’ll never truly know the mind of another.”
So we do publish things that are a little odious, because it’s handy to read comments from people outside your normal circles, to get an insight into how they think. It gives cause for thought.
However, there are some points of fact we’re not here to debate and anthropogenic climate change is one of them.
I include anthropogenic because that’s the technically correct term and it’s the human impact making the change in climate faster.
I’ll leave the minutia to others but please realise the “debate” around climate science consists of the vast bulk of expertise doing detailed research and being scared about how the upper bounds of their predictions are being breached.
The opposing camp are tiny minority who are given outsized impact by legacy fossil fuelled propaganda operations, like The Heartland Institute, IPA and The Australian.
We’re here to lead progress, to help wean people off coal, oil and gas; because it makes economic sense, offers more energy security, reduces our foreign debt and cleans the air in our cities.
I trust you’ll be able to contribute to that effort too because we really need to get cracking on it.
Cheers
Not sure what state you’re in Australia , but NSW Government Web site has 12 different weight Category’s of Cars Vans and Light Trucks. All vehicles should pay Taxes and EV should pay . At this stage my fuel Excise is paying for EV’s to drive around Scott Free
Yeah, nah. Its never as simple as “At this stage my fuel Excise is paying for EV’s to drive around Scott Free”.
And you really should stop the “my fuel excise….” type stuff. It sounds just as silly as “my taxes pay for your healthcare” etc. Its such an tall poppy attitude that helps no one.
If there is going to be a charge involving distance travelled, will this apply only to individual vehicles or if somebody owns more than one, the TOTAL of ALL vehicles? There should also be a “congestion” tax, taking into account not only the time vehicles spend in gridlock, but also on-street parking, so the size of the vehicle. Emissions? Yes, tax them. Since we now have the technology to detect somebody using a mobile phone while driving, how about a tax on the number of people in the vehicle compared to its carrying capacity? (Obviously commercial carriers exempted.) I ride both an electric scooter and an electric motorcycle, and I don’t mind paying for road use, but I would object to subsidising larger vehicles.
Surely each individual vehicle gets it own bill no?
I agree a congestion tax sounds like a good idea, and is increasingly common in European cities as I understand it.
While I’m not adverse to on-street parking ‘taxes,’ with councils now allowing developers to build narrow streets with houses practically on the curb, and insufficient garaging, is that entirely fair? Where else are people to park when they have no driveway, lawn, or garage space to put their vehicle(s)? Or are vehicles intended to be reclassified as a luxury for city dwellers? The whole 15 minute city thing for instance? And I guess a lot more work from home!
If you meant tax emissions then you’re likely to get a strong backlash for that – it’s not a policy I think any sane party would attempt. Controls or limits are one thing, taxation is another – nobody wants to sit behind a vehicle spewing out filthy black smoke the entire journey.
How would vehicle capacity monitoring even work? You’d need multiple angles to see who or what was in the vehicle. And does cargo count? What if the passenger is a Costco bear? (https://duckduckgo.com/i/d3b39ddac25857d1.jpg) Does he count as a valid passenger\cargo? 😁 And how would babies or little kids strapped into seats be counted? Seems overly complicated. Also far too Big Brother\Communist China for a lot of people to support. And why should commercial carriers be exempt from the carry tax?
Is the issue large vehicles, or heavy vehicles? What is the purpose of the tax?
AEVA obviously are a biased source that wants to minimise the pain EV owners suffer. It’s akin to asking oil companies.
Contrary to AEVA’s views, either Option 2 or Option 3 would be the fairer option – Option 1 is simply a disgusting triple dip. Why triple dip? Because ICEV owners already pay a fuel excise tax, plus GST on both the fuel and the excise tax. To then be charged a distance tax is unjustifiable.
Remember, those owning EVs are predominantly from the rich end of town, those owning ICEVs – especially old ones, are from the poor end of town. Why expect poor people to pay more than rich people? It’s simply unAustralian!
So what option is the best, having disregarded Option 1 as completely unfair and unjust?
Option 2 proposes the fuel excise be abolished and the RUC implemented instead. This would, if done right, mean something akin to the status quo continues for ICEV vehicles, though it would depend on the details, with equal treatment for EVs.
Option 3 continues the current fuel excise + GST system, but then attempts to apply a comparable rate to EVs. This seems complicated
For myself, I’d say Option 2 is the simplest, fairest, and most just option – apply equal charges to ICEVs and EVs. Since EVs weigh more than comparable ICEVs they should pay more – unless the charges are bracketed e.g. light vehicles Rate X, medium vehicles Rate Y, heavy vehicles Rate Z, and then of course the commercial vehicle rates.
Consider:
Toyota Corolla weights for 2002 to 2022 models range from 1,000 Kg to 1,5000 Kg.
Toyota Rav 4 weights for 2002 to 2022 models range from 1,200 Kg to 2,000 Kg.
Ford Ranger weights for 2002 to 2022 models range from 1400 Kg to 2000 Kg.
Tesla Model 3 weights for 2017 to 2022 versions range from 1,600 to 2,000 Kg
The 2025 BYD Sealion 7 variants range from 2,200 Kg to 2,400 Kg.
And thus we establish EVs by weight are likely to end up in the next bracket up, while older ICEV models are likely to end up in a lower bracket.
I’d say we may as well murder two birds with one stone and introduce road user charges as part of a national congestion pricing scheme. If we’re going to have congestion pricing – and we probably should – there’s no point in doubling up on schemes.
My take, as an EV Owner: Road Usage charges for all! Reduce the excise so all users pay an equivalent amount. Not sure if it is still the case, but NZ had a road usage tax where you paid so much per 10,000 km, & if you exceeded the mileage you estimated at rego time, you buy extra modules. (& I guess fines if you cheat.)
So the tax rate can be varied based on vehicle weight, & heavy transport would need to report gross weight & distance. Not super hard to do now, &
it is only a matter of time until the Govt (Big Brother!) logs vehicle usage in real time.
Personally, I think the move to EVs can´t happen fast enough. This would mean as has been said that the import of Fossil Fuel would reduce, so helping our balance of payments.
Contrary to AEVA’s views, either Option 2 or Option 3 would be the fairer option – Option 1 is simply a disgusting triple dip. Why triple dip? Because ICEV owners already pay a fuel excise tax, plus GST on both the fuel and the excise tax. To then be charged a distance tax is unjustifiable. Note that NZ does not apply Road User Charges to ICEVs, and apparently you have to prepay in units of 1,000 Km.
Remember, those owning EVs are predominantly from the rich end of town, those owning ICEVs – especially old ones, are from the poor end of town. Why expect poor people to pay more than rich people? It’s simply unAustralian!
So what option is the best, having disregarded Option 1 as completely unfair and unjust?
Option 2 proposes the fuel excise be abolished and the RUC implemented instead. This would, if done right, mean something akin to the status quo continues for ICEV vehicles, though it would depend on the details, with equal treatment for EVs.
Option 3 continues the current fuel excise + GST system, but then attempts to apply a comparable rate to EVs. This seems complicated
For myself, I’d say Option 2 is the simplest, fairest, and most just option – apply equal charges to ICEVs and EVs. Since EVs weigh more than comparable ICEVs they should pay more – unless the charges are bracketed e.g. light vehicles Rate X, medium vehicles Rate Y, heavy vehicles Rate Z, and then of course the commercial vehicle rates.
Consider:
Toyota Corolla weights for 2002 to 2022 models range from 1,000 Kg to 1,5000 Kg.
Toyota Rav 4 weights for 2002 to 2022 models range from 1,200 Kg to 2,000 Kg.
Ford Ranger weights for 2002 to 2022 models range from 1400 Kg to 2000 Kg.
Tesla Model 3 weights for 2017 to 2022 versions range from 1,600 to 2,000 Kg
The 2025 BYD Sealion 7 variants range from 2,200 Kg to 2,400 Kg.
If charged by weight EVs will cost more than ICEVs. Is this why AEVA are in a rush to protect EVs from their fair share of charges?
Let’s not forget that HEVs contribute significantly to the reduction in fuel excise collected, and to a lesser extent, PHEVs.
If there’s going to be an RUC, these vehicle types should also be part of the discussion. An RUC shouldn’t be imposed solely on EVs.
The New Zealand version apparently applies to most non-ICEVs – PHEVs pay both the excise and the RUC, albeit at a reduced rate. Naturally sales versus ICEVs, and HEVs, have apparently dropped.
Yet more evidence that Option 2 – the RUC replacing the excise tax, makes the most sense.
As a civil e engineer once said to me if we took all the heavy vehicles off the roads, they would practically last forever.
The simplest and fairest way to go would be a charge based on the weight of the vehicle and the distance travelled.
This would be a national policy and replace fuel excise and registration potentially even third-party personal and property insurance.
It may even have the positive side-effect of driving more freight back onto rail.
Hi David,
If the road toll was truly unacceptable… the police & political class wouldn’t be wringing their hands, they’d be reinvigorating rail to get trucks off the road.
Police can do that? What, like issue a directive to pull over and put your container on that flat-bed bogie?