11 Reasons Why a Great Big New Tax on Electric Vehicles is a BAD Idea

Recently, multiple states in Australia have announced that they are considering the introduction of a ‘Road User Charge’ for electric vehicles (EVs). This would be a new tax, levied by the State Government, exclusively on owners of low and zero emissions electric cars. While specifics for how this tax might be applied are still to be announced, some have already suggested a combination of increased annual car registration fees for EVs as well as a levy applied for every kilometre driven throughout the year.

Here are 11 reasons why putting a great big new tax on EVs is a bad idea.

1 // It’s bad for the climate and air pollution

Petrol vehicles produce significant carbon emissions and pollute the air that we breathe. The faster we transition our vehicle fleet away from high polluting petrol and diesel options, the better for our climate and the health of all Australians. Unfortunately, when it comes to transport emissions, we in Australia are going in the wrong direction.

As The Australia Institute has shown, Greenhouse gas emissions from diesel cars, utes and vans have risen sharply since 2011, effectively cancelling out the cut in pollution from new renewable energy replacing some coal plants. By 2030, transport emissions are projected to be 82% higher than they were in 1990.

In comparison, EVs produce far less pollution than their petrol-powered counterparts, especially when they’re charged with electricity from renewable energy sources. As Australia’s energy mix transitions to being increasingly renewable powered over time, EVs will become even cleaner and greener than they are now.

2 // This is, in essence, a great big new tax on NOT polluting

Taxes raise revenue, but they can also be used to discourage things that are considered either anti-social or harmful. For example, the Tobacco Excise helps to reduce smoking rates in Australia and alcohol taxes disincentivise excessive drinking.

Putting a tax on something that we want more of (i.e. cleaner, greener, quieter transport technologies) sends the wrong signal and some jurisdictions are attempting to do so at the very worst time, when the EV industry is just being established in Australia.

Taking all of this into account, it would be far better to put a tax on carbon pollution, which is fuelling more bushfires, more extreme heat, more intense cyclones and more severe storms.

3 // We need more EVs on Australian roads, not less

Unfortunately, Australia has a very low uptake of zero emissions cars, with only 0.2% of our national vehicle fleet being EVs. In fact, Australia has one of the lowest rates of EV ownership amongst comparable countries, with 32 of the 36 OECD nations having higher sales rates for EVs than Australia.

Making transport emissions even worse, Australia has some of the lowest quality fuel in the OECD. That means it takes Australians more fuel to go the same distance and results in more pollution.

Every State and Territory in Australia has committed to a target of net zero carbon emissions by the year 2050 (or earlier). If these jurisdictions are going to hit those emissions targets, it is essential that the Australian fleet of vehicles transition to electric models at a far greater pace than they are now. A new tax on EVs will have the opposite effect.

4 // A lack of policies supporting EV’s in Australia is holding us back

EV manufacturers are already hesitant to bring their zero emissions models to Australia due to a lack of policy certainty and support for the industry. That situation is only made worse by the fact that there is still no national EV strategy in Australia, despite one being promised last year, mid this year and again at the end of this year. Instead we have gotten ad hoc levies and disincentives.

Some of the most popular EV models, like the Volkswagen e-Golf and the Volkswagen e-Up! are not being made available in Australia. In Norway on the other hand, where there are strong policies in place supporting the uptake of EVs, Volkswagen expect 90% of their vehicle sales to be electric by next year.

While many EV manufacturers are avoiding Australia altogether, our market can’t even retain the few models that we actually do have access to. Renault recently pulled the electric Zoe from the Australian market, citing the government’s weak stance on vehicle emissions as a contributing factor.

5 // Australians want governments to make it easier, not harder, to own EVs

Australia Institute research shows most Australians want the State and Federal Governments to remove barriers to electric vehicle ownership, not impose new ones.

· An overwhelming majority of Australians (79%) support the Government building a network of charging stations across the country for electric vehicles.

· The majority of Australians support governments procuring electric vehicles for their fleet (76%) and providing loans for electric vehicle uptake (55%).

· Almost three out of four Australians (74%) support rebates to promote installation of charging stations for electric vehicles and for new apartment blocks to be required to host charging stations (73%).

· Two out of three Australians (66%) want the Luxury Car Tax removed from imported electric vehicles.

6 // Fuel taxes don’t even pay for roads!

Some say that a State based EV tax is needed to replace falling revenues from the national Fuel Excise tax. But the Fuel Excise is levied by the Federal Government and, despite what many people think, isn’t actually used to directly fund roads. Instead, the money raised by the Fuel Excise goes into general revenue, just like most other taxes.

Why make less than 1% of our cars (electric) do what 99% of our cars (fossil fuelled) do not?

7 // There are better ways to raise revenue

Since the funding from the Fuel Excise goes to general revenue, it is worth considering other ways that money could be raised as our vehicle fleet become more efficient.

As well as putting a tax on carbon pollution, we could also close tax loop holes that are exploited almost exclusively by wealthy Australians, making our system fairer and increasing general revenue for the government at the same time. There are also a number of industries that could be considered for a super profits tax including banking, mining, and other industries that have been identified as having low rates of competition and high rates of profits for some time.

Of course, there are many other ways that revenue could be raised that are both smarter and fairer than putting a new tax on EVs. Several, including the above examples, are discussed in this paper from The Australia Institute.

8 // It will raise very little money

In its recent State Budget, the South Australian Government admitted that if an EV tax were introduced, it would actually raise very little revenue now and over the coming years.

“Collections from the proposed user charge are expected to be very low across the forward estimates while there are still very few electric and zero emissions vehicles in South Australia,” — State Budget 2020–21, Budget Paper 3 — Budget Statement, Page 33

9 // The cost of an EV is already a big disincentive

The single biggest thing holding back the mass uptake of EVs in Australia is the high upfront cost. In fact, a recent survey from AGL showed that three in five Australians (60%) are interested in owning an EV, but the high purchase price is holding them back.

Putting an additional tax on the ownership of an EV will make it even harder for the high number of Australians that want to make the transition to EV ownerships.

10 // It will be difficult and expensive to administer

The higher the cost of administering and collecting a tax, the less efficient it is.

Many questions have been asked about how a distance related tax could be applied to EVs. Would someone be paid to come and check the reading of your car’s odometer, to see how far you’ve travelled every year? What about use on private roads or properties? What about travel on interstate roads?

Privacy concerns have also been raised after proponents of the tax said that governments might use GPS tracking to determine charges for its planned distance-based fees.

11// EVs are awesome

“I’ll tell you what — that is unbelievable. If this is the future, we’re going to have some fun!” That’s what David Sultana, the Vice President of the Holden Special Vehicle Owners Club said after seeing what EVs are capable of.

And what about the weekend? Do EVs really have the pulling power that we need to get out and enjoy ourselves? Well, just so there’s no doubt whatsoever, here’s a video of a Tesla towing a Boeing 787–9 Dreamliner…

Whichever way you look at it, introducing a new tax on electric vehicles is the exact opposite of what Australia should be doing right now to encourage the clean, green transition of our transport sector that is so badly needed.

You can add your name to The Australia Institute’s petition, calling on State Premiers dump the EV tax here > https://nb.tai.org.au/no_ev_tax

an independent think-tank based in Canberra > australia.org.au