Victorians driving plug-in hybrid electric vehicles could be paying more in road taxes for choosing a lower-emissions car.
Motorists say they’re being “double taxed” under Victoria’s almost year-old electric vehicle road scheme, which charges drivers an electric vehicle levy as well as fuel excise.
Bruce Gill, hybrid car driver, is being “double taxed” by having to pay both fuel excise as well as the 2 cents per kilometre road user charge on his electric vehicle.Credit:Justin McManus
They’ve called for the scheme to be scrapped or redesigned after South Australia’s new Malinauskas government ditched plans for a similar charge, fearing it would discourage green vehicle ownership.
Bruce Gill had the environment in mind when he chose a plug-in hybrid electric (PHEV) model Mitsubishi Outlander in 2016, hoping to use its battery to minimise petrol use.
But the agricultural scientist, who lives outside Shepparton, believes he could be paying more in motoring taxes than if he had bought a fuel combustion model because he is slugged twice: 2¢ for every kilometre he drives under Victoria’s EV road charge as well as excise on fuel when his battery runs out after about 40 kilometres.
“Because you’re driving country kilometres, the battery doesn’t go very far, so you’re still paying significant road tax on every litre of fuel,” Gill said. “It’s not a lot of money in the scheme of things … [but] it’s the inequity and the principle that’s not been properly considered.”
Victorian Treasurer Tim Pallas has justified the EV charge – panned by environment groups and carmakers as the worst policy of its kind in the world – as a fair way to replace the federal petrol excise of 44.2 cents per litre (which has been halved until September 28 as an emergency cost-of-living relief measure).
But Electric Vehicle Council chief executive Behyad Jafari said Victoria was sending “perverse signals” with its road-user charge and nudging motorists towards combustion vehicles rather than encouraging a green shift.
“It’s never too late to admit you got something wrong and to fix it,” Jafari said.
Australia is a laggard in the adoption of electric vehicles, accounting for around 2 per cent of new car sales compared with 4 per cent in the US and 17 per cent in Europe.
Gill drove his Outlander 5092 kilometres in the first seven months of the road-user charge scheme, using a combination of battery power and 308 litres of petrol. He paid $130 in fuel excise and $102 for the road user charge – $232 in total.
That’s more than the $160 in excise he would have paid had he purchased a fuel combustion-only Outlander, which would have used around 362 litres to drive the same distance (based on its advertised fuel consumption, which generally understates real-world fuel use).
If Gill drove at the same frequency over a year, he would pay $104 more in tax and charges versus a combustion engine. A $100 annual EV registration discount brings two options broadly into line.
But Jafari said that the comparison demonstrated that if Gill or other regional plug-in hybrid drivers travelled more kilometres annually they could easily end up paying more in road taxes than combustion engine drivers.
“That situation should surely not be possible under any rational modern policy,” he said.
Treasurer Tim Pallas said the charge was a “very minor impost” on electric vehicle users, who would generally pay around $200 to $250 a year while being eligible for a $3000 subsidy for buying a new EV and the $100 registration discount.
“The overall direction across the nation is that we need an efficient, long-term solution for how we charge for the use of the roads,” he said. “This is a very minor impost on electric vehicle users”.
Victoria is the only state that has implemented a road-user charge for electric vehicles, with NSW and WA set to start charging in mid-2027. SA’s new Labor government abolished plans for a road-user charge in May, saying the tax was a barrier to motorists choosing greener options.
A survey by the Australia Institute found in 2021 that seven in 10 South Australians were less likely to purchase an EV if the road user charge was introduced.
“Victoria is the only state that’s currently penalising motorists for making the switch to cleaner and greener electric technologies,” said Noah Schultz-Byard, director of the institute’s SA branch.
“The Malinauskas government understood the EV tax policy will act as a disincentive. The pressure is on the Andrews government to really follow South Australia’s lead and remove this tax.”
Two Victorian EV drivers are challenging the state’s road tax in the High Court, on the basis the constitution gives the Commonwealth the exclusive power to impose such a levy.
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