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Victoria set to follow South Australia with widely panned electric car tax as state governments fear fuel excise drying up

Widely panned and first-of-their-kind EV taxes are set to expand across Australia as states fear lack of fuel excise revenue.

Despite having a zero emissions by 2050 target, the Victorian state government is set to impose a tax specifically for electric vehicles, as outlined in its 2020/21 budget.

The tax consists of a 2.5 cent per kilometre charge for full EVs or two cents per kilometre for plug-in hybrids, amounting to what the Victorian government expects to be $30 million in revenue per year.

The move has been slammed by Electric Vehicle Council chief Behyad Jafari, who said the decision was “perplexing.”

“No other nation on earth has thought it sensible to apply a special new tax to electric vehicles,” he said. “This new tax is built on a myth. Fuel excise income is not quarantined for roads and will drop in the long run.”

According to the Electric Vehicle Council, the Victorian treasurer has repeatedly declined requests for a meeting.

Victoria's new tax will even target plug-in hybrids. Victoria's new tax will even target plug-in hybrids.

There are already widespread concerns that the Victorian and South Australian levies will hamper already poor EV uptake in Australia, and even New South Wales looks set to follow suit in the near future with its Treasurer, Dominic Perrottet, having similar views on taxing EVs.

The Electric Vehicle Council asserts that such taxes – the only of their kind in the world – will cement NSW (and indeed, Australia’s status) as a “dirty car capital of the world” as new taxes will disincentivise already poor EV uptake, with upfront cost still rated as the number one factor in the crucial fleet market.

Manufacturers like Volkswagen and Jaguar Land Rover have already expressed their dissatisfaction in the past, as the Australian market requires stringent safety standards but has poor fuel quality control, ruling out some newer-generation engines (which have particulate filters not compatible with our poor quality fuel overseas) and making it prohibitively expensive to bring new technology to Australia.

According to a recent study by Ernst and Young published by the Electric Vehicle Council, every new EV already provided a benefit of $137 per year per vehicle to government coffers, even factoring in the lack of fuel tax excise.

Despite this, Mr Jafari isn’t against the idea that EVs should pay their share of road maintenance, but says in an article directed at the NSW government’s plans: “One day, when electric vehicles start becoming commonplace, the time may come to consider new taxes. But at this point in our history, when we should be doing everything possible to encourage people to switch to electric vehicles, this tax would be pure poison.”