EV Owners Triumph: High Court Strikes Victoria’s 2.8c Per Km Tax

Victoria's EV tax ruled unconstitutional

Victoria’s attempt to levy a 2.8c per kilometre tax on EV owners has ended, with the High Court not just striking down the law in Victoria, but ruling it amounted to an “excise” – which Australia’s Constitution forbids states from collecting.

The judgement, available here on the Australian Legal Information Institute website, means no other state will be able to follow Victoria’s lead.

The Victorian government’s tax was last year labelled the “worst EV policy in the world” in an open letter signed by dozens of companies in the electric vehicle space.

EV owners Christopher Vanderstock and Kathleen Davies took the Victorian government to court over the tax in 2021, and were able to get the backing of the Australian Trucking Association and the Commonwealth Attorney-General. The other states and territories backed Victoria.

Commenting on the victory, Mr. Vanderstock said:

‘The world’s worst EV policy is GONE! This is a key moment for all Australians, and I hope that everyone is celebrating right now!”

The court case hinged on whether the EV levy amounted to an excise, as constitutional expert professor Anne Twomey explained in 2022 to The Guardian, or a consumption tax, which isn’t prohibited by the Constitution.

The High Court’s majority judgement noted this is the first time this century the court has been asked to rule on the relevant part of the Constitution, Section 90.

Victoria was ordered to pay costs in the proceedings.

Considering fueling an EV with solar energy can cost less than 1c per kilometre, this is great news for the overall cost of EV ownership in Victoria.

If you have an EV, don’t miss Finn’s ‘EV Charging 101‘, which covers everything you need to know about charging your electric vehicle at home and on Australia’s roads.

About Richard Chirgwin

Joining the SolarQuotes blog team in 2019, Richard is a journalist with more than 30 years of experience covering a wide range of technology topics, including electronics, telecommunications, computing, science and solar. When not writing for us, he runs a solar-powered off-grid eco-resort in NSW’s blue mountains. Read Richard's full bio.

Comments

  1. So does that mean they are going to refund all the money received so far? And reinstate the regos that for cancelled because they didn’t pay?

  2. George Kaplan says

    While SQ will no doubt be delighted by the ruling, it is a blow against most Australians, and logic, seeming to rely on legal contortions to reach its desired outcome.

    The case appears to have entailed activist lawyers representing an activist manager, and an activist engineering consultant protesting having to pay for fair use of roads, which all regular petrol, diesel, and LPG vehicle using Australians must.

    In deciding fees for the privilege of using something constitute an exercise, has Victoria High Court opened the door to other claims? Are road tolls for instance now an illegal excise tax? I’ve no doubt most Australians would be delighted to pay less tax, but to rule EV mileage charges are an excise tax appears to be a novel interpretation of law that primarily benefits wealthy and inner city dwellers. Those on low incomes and outside city cores are less likely to buy EVs and thus will be paying fuel excise. And note that the Australian Taxation Office itself holds that excise is a tax “… levied on certain types of goods produced or manufactured in Australia …” which isn’t particularly pertinent to this case – Australia doesn’t manufacture EVs.

    • We must also consider that EVs don’t contribute to toxic air pollution such as CO2, CO, NoX and SoX. There is a social benefit from EVs to the community for cleaner air. If people don’t believe this, then I dare them to sit next to a tailpipe of an ICEV for 3 mins and see how they last!

      It’s well documented that air pollution puts a strain on the public health system for people suffering from the effects of air pollution.

      Take for example the Hunter and La Trobe valley regions. Both are overrepresented with people suffering from respiratory illnesses. The cause? The coal-fired power stations and coal mining close-by.

      So, given that EVs are more expensive than ICEVs, there must be some acknowledgement that a reduction in the use of FF is a benefit for all. But slugging a per km levy is not the way to do it.

      It should be levied against the weight of the vehicle as it’s this that does damage.

      Secondly, what happens on toll roads, they are already levied against all vehicles per km. So, driving on a toll road becomes a double levy for EVs if they also had to pay a EV road levy.

      And what about driving on private property, should that be discounted too?

      If anything, FF should be levied harder to get people off the stuff. Just like what they did with tobacco. By the same token, should non-smokers be levied for not smoking? Non smokers don’t contribute to the health system for each litre of clean air breathed/exhausted because they don’t pay a per litre of air. So, why should EVs be slugged with a per km levy for driving a zero emission vehicle? See the flaw in the case for a per km levy?

      Car registration, at least in NSW, is slugged with a weight based levy. Why is this? Obviously, the weight has something to do with damaging the roads.

      • So ICEVs have to pay twice on toll roads but EVs don’t, where’s the logic in that comment? Why should I pay more to use a public road than an EV? I have to pay per km with petroleum taxes why not EVs? Most toll roads are on land owned by the government, ie us, the people so if EVs don’t want to pay a second toll why should I through a petrol excise, when the toll pays for the upkeep of the road?

    • As for road tolls, they are not an excise tax, they are fees collected by private operators that have long term contracts to manage tolled roads before they revert to government ownership. Do not confuse toll with tax. They have different meanings. Why should an EV pay another levy on a tolled road? Toll roads are charged by the km. This would be a double levy imposed. The toll operator has already collected the toll for managing/maintaining the tolled road, why would the state government want more money from an EV for using the tolled road? The tolled road is not owned by the govt, it’s a private road available for the public to use. Clear distinction.

      Most of the road damage are caused by trucks and heavy haulage vehicles.

      My street is almost free of road damage because no trucks are allowed to drive on it (it has a weight limit). The only regular truck that drive on it, is the weekly garbage truck. Yet, the road one block over is heavily damaged because a lot of trucks use it every day. It’s in constant need of repairs. And just as well the weight limit imposed is there otherwise the trucks would be using my street as a shortcut because a lot of cars take it (it avoids a 40km/h school zone). Yet, with increased car traffic, road damage is minimal.

      Being wealthy has nothing to do with EV ownership. If people can smoke and drink in great quantity, the lifetime costs of such activity can easily make up for buying an EV. No excuses. What’s a pack of ciggies these days? $50? A pack a day smoker will blow up in smoke about $18,250/pa. 3-4 years of that can easily buy a decent EV. So, it’s up to people what choices they make in regards to EV ownership, but don’t say it’s for the wealthy or inner dwellers, got nothing to do it with, just poor deflection.

    • I presume it doesn’t stop the Commonwealth from instituting an excise across the entire country, and then either keeping the money or distributing it to the states via some sort of road funding.

  3. Let me see if I get this right . Me driving a Diesel or electric vehicle pay government tax at the bowser , Electric cars pay nothing … The EV drivers expect Governments { my taxes } to put in public EV charging points . The state government don’t build petroleum stations . The state governments already give rebates for EV , Petrol and Diesel buyers get no Rebates . It seems to me the EV community want everything given to them with them not lifting a finger . Remember the average Australian cannot afford an EV .

    • Your argument is akin to tobacco levies. Tobacco levies are slugged on smokers because they have a higher risk on putting a strain on the public health system. So, they should contribute towards the cost of the public healthy system. Non-smokers shouldn’t have to.

      You would be arguing that non-smokers be charged a small levy for breathing clean air even though they don’t pollute it and less likely to end up in hospital with respiratory related illnesses caused by smoking.

      See the flaw in the argument for imposing a per km levy on EVs?

      EVs contribute to a social benefit by zero emissions when driving. This should be recognised as a benefit for all, not just EV drivers.

      If the state government wants more funding, they will need to increase the weight levies on all vehicles. Not just a particular type of vehicle per km.

      No, electric cars do not pay nothing.
      Car rego is still required (a weight based levy is imposed)
      GST is charged for electricity to charge the EV.
      Higher GST on the EVs due to their high costs.

      NSW state government is pulling the EV rebate on 1st Jan 2024. Won’t be long for the other states to follow suit.

      Meanwhile……..
      The FF industry in Australia gets a whopping $57B+ subsidy for the year 2023, (it was $55B for 2022), while renewables got about 20% of that.

      Globally, FF subsidies amounted to about $7 trillion….

      If you are going to whinge about EVs, then you should vent your anger towards the FF industry because they get the biggest subsidies. Why do they need such large subsidies year in, year out whilst continuing to pollute the environment? Can’t FF survive on their own? A bit of a oxymoron that the FF industry want “free market” but yet receive large subsidies?

      Subsidies for EVs pales in comparison to what the FF industry receives…..

  4. re the headline: EV Owners Rejoice

    I’m sure plenty are, but there are also lots of us who accept EVs need to pay our share too. The Vic implementation was problematic, but increasing EV sales means a new formula is needed. Hopefully the feds will now deal with this.

    The current free ride for EVs is unsustainable and unhelpful. It increases the chance of some resentful person keying my car in the Bunnings car park too.

  5. Craig Iedema says

    As others have posted, something needs to replace fuel excise as sales of ICE vehicles decline.

    When the high court ruled that states couldn’t levy fuel excise the federal government stepped in and replaced it with a federal tax. And I expect the same will occur here. Maybe with a federal RUC or similar.

    • Let me first state that I am not anti-EV, but exactly this – the model was perhaps not cleanest but where does the excise from fuel come from in the future when ICE is not the major percentage of road users
      Roads will still need to be maintained so surely adding a tax per km is akin to excess at the bowser -ie: use more fuel to generally travel more kms and pay more excise.
      I really struggle to see why the EV adaptors cannot see there needs to be equity in this, does that mean for all the ICE users that they should be entitled to a refund on this excise.
      The argument that EV saves everybody when being used is to some extent moot – where does the energy, for the most part, get generated here in Aus? Mostly non renewables
      Will we also see an uproar when/if vehicles are taxed per weight to use roads – in time EV weight will come down but right now they are significantly heavier than an equivalent ICE vehicle potentially adding to the premature wear on our roads as a result

  6. The taxing of EVs is a complicated subject and most commenters cherry-pick the factors that favour their ideology.
    Putting aside the social policy considerations I would like to see a comprehensive user-pays policy which would account for the fact that heavy vehicles are responsible for a very large proportion of the cost of building and maintaining roads, particularly because they also travel much larger yearly distances.
    Of course this cost would be passed on to consumers but it would also mean that those who consume less would not pay for the consumption habits of others. It would also mean that the multinational company whose milk tankers are tearing up my local roads largely to export produce for the benefit of their shareholders would pay their fair share.

  7. zime_a_dime says

    I have heard one article about the decision saying ‘This is a win for the EV car owner and the environment’.

    This is a win for the former but not the latter.

    Firstly now EV owners don’t have to pay for the road damage they cause and are not paying their fair share. The argument is that they should be taxed by the federal government but does this mean that we now need a second vehicle registry system as well as the state one or will the states allow the feds to use theirs? If it is a federal registry then probably they will use the same call centres that Centre Link uses so I can have the joy of being on hold for 6 hours when I need to talk to a real human. The federal government just sucks at service delivery. That is the job the states do.

    The decision also blows a hole in fed/state funding. A congestion charge for cars to use roads would now be illegal for a state to do. People are also talking about a whole host of state taxes in the firing line. Now the states will lose the money they need to negotiate with the ‘control freaks’ in Canberra and get it back, hopefully with only a few strings attached, good luck with that.

    The real problem is that electric cars are still cars. They consume road space, contribute to traffic congestion and fight with bikes and buses/trams for road space. We really need to encourage people to bike for short distances, use PT more and drive less. This decision makes it harder.

    https://theconversation.com/the-high-court-decision-on-electric-vehicles-will-make-charging-for-road-use-very-difficult-216107

    Also if you ignore CO2 emissions, which no doubt which is very important. They emit 20% more particulate pollution than comparable cars do tyre wear.

    https://www.theatlantic.com/technology/archive/2023/07/electric-vehicles-tires-wearing-out-particulates/674750/

    My next car will be an EV but for supermarket shopping 1 km down the road I use an electric tricycle and getting to work I use a bike and PT.

  8. The LNP is demanding the Federal Government Legislate to allow such taxes to retain equity and revenue as fuel levies bring in $16B each year.

    But they failed to mention the $13B in fuel subsidies to mainly LNP supporters

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