Australian Government Plans to Tax Electric Cars; says they are damaging roads
Plans are being fasttracked for a new road user charge for electric car owners in Australia. And this will cost well a lot of money and time to therefore now own an EV. [Music] The treasurer of the Australian government Jim Charas and state government’s fasttracking plans. They are fasttracking plans for a new road user charge. And that’s not all that’s going to change. The treasurer has long flagged the development of a new road user charge across Australia for drivers of electric cars to ensure EB drivers are contributing to what they say is a fair share to road upgrades. Now, none of this report acknowledges the fact that internal combustion engine cars cause cancer and they cause all kinds of illnesses. The Australian government would save literally hundreds of millions, potentially billions of dollars. We don’t know the exact numbers, but huge amounts of money would be saved if all of a sudden tomorrow every car in Australia was electric and not putting out poisonous gases. So the government is not looking at this in my opinion from a rational perspective. It’s simply a revenue raising exercise. The government, state treasurers in industry experts are gathering to hold talks on this how this new road user charge will work ahead of an economic roundt. All Australian motorists who buy petrol and diesel pay 51.6 cents a liter in fuel tax based on a planned New South Wales road user scheme. A national roll out will depend on your mileage, but might cost around $300 to $400 a year. Now, I should point out that New South Wales plans for this national road user scheme will be probably if they do put those plans in place, I believe they’ll go to the high court and I’ll personally be part of this legal case. I will definitely take them to court as Chris Vanderto did in 2023, took the Victorian government to court u because it will be deemed I believe most likely to be illegal. The reason being states themselves can’t implement these charges. That’s why the road tax or the EV tax that was imposed on EVs in Victoria was overturned in court by the high court. The high court said actually it was an illegal charge. The only government, the only legal way to do this is for the federal government to do it. That’s why the states are working with the federal government in order to try and push this through so that it can’t be fought in court. New South Wales officials have forecast $73 million in revenue from the road user charge for the 2027 2028 fiscal year increasing to 141 million the following 12 months. Obviously they believe that a lot of people are going to buy electric cars. Therefore they’re going to make a lot of money from taxes. The infrastructure partnerships Australia road user charge forum in Sydney this week includes officials from New South Wales and Victorian Treasury departments, the Productivity Commission, Trans Urban Chief Executive, uh, Australian Automobile Association managing director Michael Bradley. Probably some vested interests from the fossil fuel industry. I’m going to guess all from Legacy Auto as well. Victorian treasurer Tim Palace said that electric vehicles are heavier and do more damage on the road network as a consequence than do internal combustion engine vehicles. Victoria is clearly quite anti-EV and as a result, EV sales in Victoria haven’t taken off to the same degree that they have in other states. Now, is Tim correct that EVs do more damage to the road network as a consequence of being heavier? Well, on two levels, I would say no. Let’s look at the first level. Is it true that cars cause significant damage to the road network? Well, actually the Victorian government’s own data reveals that they say their own data from Vicros, which is the Department of Transport in basically an arm of the Department of Transport in Victoria. They say that 95% of all damage done on Victorian roads is caused by trucks. Trucks. Trucks. And I repeat that. 95% of all damage done on Australian roads is done by trucks, not by cars. However, if you actually look at electric car sales, there is not currently any electric pickup trucks you can buy. And actually, the average electric vehicle is not particularly big. EV sales. Generally, the most popular EVs are BYD3, the Tesla Model Y, probably the new Zika 7X, uh, Xping G6, that’s a popular car now, the Tesla Model 3, and of course the Jile EX5, that’s also popular. The MG4, that’s a hatchback, the Bid Dolphin. None of those are particularly heavy. None of those are pickup trucks. The two bestselling vehicles in Australia, the two bests selling vehicles that make up a huge percentage of Australia’s car market are pickup trucks, utes. Yeah. So, utes dominate the internal combustion engine sales in Australia. Already, you start to see that these Tim Palace claimed facts are complete a complete joke. Now, if we look at it on an individual basis, what’s the most popular internal combustion passenger car in Australia? It’s the Toyota RAV 4. The Toyota RAV 4 weighs about 1,800 kg. In fact, 1,750. What’s another car that’s say an EV that’s a similar size, very similar size, uh, and is also very popular? The J EX5. The J EX5 weighs about 1,730 kg. In fact, it’s 20 kilos less than the Toyota RAV 4. So, in this instance, Tim was completely wrong. What about say a Tesla Model 3? There’s been a lot of Model 3 sold in Australia. weighs 1,750 kg. Oh, interesting. That What about an internal combustion car? Uh, a Mercedes-Benz C-Class. That’s the same size. Uh, that weighs around 1,850 kg. You can see here, uh, a pattern is emerging. This idea that EVs are heavier is well, often not even true. In the case of something like a BEDC line 7, yes, that’s true. That’s quite heavy in comparison to say a similar internal combustion car. It weighs nearly 2,400 kg. But then you’ve got the Tesla Model Y and the XP G6, both of which weigh less than 2,000 kg and are both on par with the weight of internal combustion engine vehicles that are about the same size. The Productivity Commission, basically the Productivity Commission, it’s kind of I guess like a division of the government that’s intended to raise revenue. They have urged the government to take action over declining fuel excise revenue and spiraling rising maintenance costs. By giving drivers a clear signal about the cost of infrastructure, they would have an incentive to use it more efficiently, said the Productivity Commission. The Treasurer has made no secret of his support for a shakeup of the current system before the election, raising the idea with business leaders in February. The government is looking for any way that they can tax the Australian people. and this is one of them. We will also continue to work with states and territories on the future of road user charging, said the government in June. All of this represents a big agenda on the supply side of our economy. None of these reforms are simple. So, how does a fuel excise work? Well, first of all, does the fuel excise actually cover road repair in Australia? Well, it doesn’t. Actually, most of the money raised from taxes from the fuel excise goes straight to the government and then they may use it for road fixing or not, but it doesn’t actually directly go into some magical pot and therefore all this money collected from the fuel excise or at least a portion of it goes to fixing roads. Doesn’t work that way at all. But anyhow, the current rate of fuel excise is 51.6 cents in excise for every liter of fuel purchased. For a typical household with a car running on petrol, the tax costs about well more than $1,200 per year. But the flat sales tax isn’t paid by drivers of pure electric cars who simply need to plug in their cars to recharge. And let’s be honest, I mean, probably about 80% of Australian EV owners use solar from their own rooftops, which is logical. Registration and driver’s license fees go to state and territory governments. Fuel excise is collected by the federal government. Australian motorists paid an estimated $15.7 billion in net fuel excise in 2324 year and are expected to pay 67.6 billion over the four years to from now to 2627. However, governments have long warned that a rose user charge will be required to fill the gap in the budget left by declining revenue from the fuel excise as the petrol and diesel engines in new cars consume less fuel and Australians adopt hybrid and electric cars. So, the Australian Automobile Association or the AAA is calling for a national approach to road user charging but wants a guarantee the revenue will be actually used for road upgrades. In other words, the Australian Automobile Association says the revenue is not being used for road upgrades and the government is basically lying about that, which we all know that’s the case. The AAA backs a distance-based road user charging as a fairer and more equitable way to fund land transport infrastructure. The 2024 federal budget forecasted a reduction in fuel excise receipts by 470 million over four years from 2024 to 2025. But here’s what I’d say to the Australian Automobile Association and in fact to the government. If this is about fairness, yeah, if this is actually about the word fairness, like if we want to be extremely strict about that idea, then the Australian population wouldn’t be paying a road user charge or they’d be paying a very very small amount because the facts are this. Every single state in Australia confirms that 95% of damage done to Australia’s roads are done by large trucks. Yeah. Large heavy vehicles, not by passenger cars. So if the damage being done to Australian roads isn’t even done, the majority of it by passenger cars, why exactly are passenger cars paying the majority of these taxes? And the reason is this has nothing to do with fairness. Sure, I understand the concept, but if you actually think about the fairness of it all, trucks should be paying 95% and cars 5%. If that were the case, these taxes would be tiny. But they’re not. They’re huge. So, the truth is, the average Australian motorist who owns an internal combustion car is paying well over their fair share of money to fix the roads in Australia. Currently, New South Wales is the only state with firm plans to introduce a road user charge from 2027 or when EVs hit 30% of new car sales. Plug-in hybrid EVs will be charged a fixed 80% proportion of the full road user charge to reflect their vehicle type. So, if you’ve got a plug-in EV, this is actually pretty stupid from the New South Wales government because by the time we get to 2027, uh there will be probably at least 20 different models of plug-in EVs with more than 400 km of range. Yeah. So, these guys are going to get a discount on their charges, even though probably 99% of them will never use the engine in their plug-in vehicles, right? Because you’ve got more more than 400 km of range from your plug-in hybrid. Do you need the battery? I mean, do you need the engine? No. Anyhow, Western Australia has stated an intention to implement a road user charge. Meanwhile, Victoria’s electric vehicle levy had to be scrapped following a ruling from the High Court that it was illegal. Yeah. So, if New South Wales tries to implement their plan in 2027, there’s a good chance it will be considered illegal as well by the High Court. Two Victorian electric car owners launched a legal challenge on the basis the tax was not legal as it was an excise that only a federal government could impose. Now Chris Vandertock, you guys know I’ve had him on the channel, interviewed him here on the channel, was one of those two people. They won with the high court upholding the legal challenge. There have been several false starts to enshrine a road user charge, including in South Australia where the former Liberal government planned to introduce a charge for plug-in electric and other zero emission vehicles which included a fixed component and a variable charge based on distance traveled. It was later pushed back to 2027 due to a backlash before the legislation was ultimately repealed. Now, I should point out that in Victoria, when the uh what became subsequently illegal road the tax on EVs was imposed on Victorians, the government actually fined thousands of Australians for not correctly filling out the paperwork. Yeah, they find them massive fines. And there was a lot of confusion from people. How do I fill out this log book? I’ve got to write down all my kilometers. Got to fill out this all this information. And when they didn’t do this correctly or in some cases didn’t submit it because probably a lot of them didn’t even know they had to, the government fined them thousands and thousands of dollars. Now all those fines were eventually ruled to be illegal as well. Some experts argue the gold standard for reform is a variable rate that factors in the vehicle’s mass, distance traveled, location, and time of day. Imagine that. Imagine the government was following you to that to that extent, right? You had to tell the government um exactly the weight of your car, exactly how far you travel, the exact location, the exact time of day. You’ve got to keep all that information. That is an extremely ownorous thing to have to do. So if the government decides that is a gold standard, that’s what we’ll do. Imagine how many people would just say, “No, I’m not going to buy an EV. That’s just crazy.” I mean, the government wants to know exactly where I am, all times of day, how far I traveled, where I went, um which institution I visited. This is extreme. This is the point of this. Absolutely. Clearly, clearly there’s some vested interest going on here where they don’t want EVs to be sold. If those things are enforced, I think it’s pretty clear that that is the case. There’s a big barrier to the Commonwealth imposing these charges though because the Constitution prohibits it from imposing taxes that discriminate between states or parts of states. So this uh these taxes could be challenged and I for one if there are any possibility of challenging this will definitely be going I’ll definitely be aiming to do that. State governments though could impose these levies. However, as the experience of Victorian government underlines their tax being ruled illegal, this is legally complex and it’s going to be an incredibly challenging situation for the government. I don’t think this is worth it. It’s not it’s not a huge amount of money. I mean, the Australian GDP taxes and everything else, we’re talking, you know, trillions of dollars here. This is a pretty small dot in the ocean. But clearly the government is very concerned about tax revenue and they believe that EVs are the next target for them to go after. Let me know what your thoughts are. Thank you for watching. Bye-bye. [Music]
Australian Government Plans to TAX Electric Cars, Claiming They Damage Roads – In a controversial move, the Australian government is proposing a new EV road tax, arguing that electric vehicles are causing significant road damage due to their weight. This policy could impact Tesla, BYD, and other EV owners, sparking debates over sustainable transport, green energy policy, and the future of the electric vehicle market in Australia. Is this the beginning of a global trend to tax EVs despite their environmental benefits?
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👇Reference to the news/charts & videos used in this video:
https://www.news.com.au/technology/motoring/on-the-road/plans-being-fasttracked-for-new-road-user-charge-for-ev-drivers/news-story/f92e837e0e7eb8de5265ef6eb49f433b https://www.codea.com.au/publication/high-court-ruling-victorias-electric-vehicle-charge-held-to-be-invalid/#:~:text=The%20High%20Court%20held%20that,invalid%20exercise%20of%20state%20power.
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