Victoria’s Electric Car Tax “Worst EV Policy in the World”

Victoria EV tax - ZLEV Road User Charge

Dozens of companies and organisations have put their names to an open letter to Victorian Parliament encouraging a vote against an electric vehicle tax in the state.

In November last year, Victorian Treasurer Tim Pallas announced plans to introduce a 2.5 cent/km charge applying to electric and other zero-emission vehicles, along with a 2.0 cent/km charge for plug-in hybrid-electric vehicles. A fuel-efficient petrol or diesel car owner only pays around 2.1 cents per kilometre in fuel excise tax.

Under the “ZLEV Road-User Charge” and based on the average distance travelled annually for light passenger vehicles in Victoria, EV owners could forking out $330 a year and plug-in hybrid owners around $260 a year.

Subsequent polling found while many Victorians would like to buy an electric car, taxes on EVs could have an impact on uptake; with 72.1% believing taxes will mean fewer people buy them.

Among the signatories to the open letter are Hyundai, Volkswagen, Uber, the Electric Vehicle Council, Solar Citizens, Environment Victoria and the Australia Institute.

Part of the letter states:

“Most industrialised countries are prioritising incentives for electric vehicles to benefit from cleaner air and new jobs from a growing industry. This new tax means the world’s manufacturers are far less likely to send Victorians their best, most affordable, zero emissions vehicles.”

It points out every other state and territory in Australia has ruled out or delayed plans for a new tax on electric vehicles.

An example is South Australia, which was the first to formally announce plans to introduce an EV tax. The reaction to SA’s plan was such that in March this year, the Marshall Government said it would delay its introduction by a year to allow time to see what happens across the border. It’s probably no coincidence this will likely be after SA’s next state election, and something EV-supporting SA voters may want to keep in mind.

“Ill-Conceived Anomaly of A Tax”

The Australia Institute’s Richie Merzian said penalising EV owners because they don’t pollute the atmosphere is absurd.

Australia has the lowest rate of electric car ownership among developed countries, and if Victoria goes ahead with this it will be the only stand-alone electric vehicle tax in the world.

The Institute says there are a number of things that can be done to change Australia’s standing and an EV road user charge certainly isn’t among them.

“Our research shows that there are a range of policies that support the uptake of EVs which are very popular the public,” said Mr. Merzian. “These include offering loans for electric vehicle purchases, building more charging stations and removing the Luxury Car Tax on zero emissions cars.”

Solar Citizens’ Ellen Roberts says while the Victorian Government is helping households install solar panels through the hugely popular Victorian solar rebate, it should be leading the charge and making it easier for Victorians to invest in cleaner transport.

It’s proposed Victoria’s ZLEV Road-User Charge will come into effect on July 1 this year.

The full open letter (really more an ad) has been published in The Age and can be viewed here.

On a related note, the ABC published a report this week explaining in more detail why EV makers are skipping Australia when releasing their latest models. Michael Bartsch, general manager of Volkswagen Group Australia, is quoted as saying

“We are a Third World dumping ground in terms of automotive technology.”

In relation to Volkswagen signing the open letter, Mr. Bartsch said:

“Volkswagen does not ask for incentives to import zero emission vehicles, rather for the abandonment of such disincentives as this ill-conceived anomaly of a tax.”

Here’s SolarQuotes Founder Finn Peacock’s views on EV taxes:

About Michael Bloch

Michael caught the solar power bug after purchasing components to cobble together a small off-grid PV system in 2008. He's been reporting on Australian and international solar energy news ever since.


  1. Chris Thaler says

    Provided a suitable reduction in annual registration charges for fully electric road vehicles was introduced at the same time the effect could be nett zero. As EV’s will also produce wear and tear along similar lines as conventional vehicles the road user charges will need to be the same. This would be a better “user pays” style.

  2. Ronald Brakels says

    At a carbon price of $70 a tonne — around the lowest that’s reasonable — internal combustion engine passenger cars should be paying an average of around 2 cents a kilometer. There are also health costs from their exhaust pollution. To get electric vehicles to pay a km road use charge while internal combustion don’t pay for their health and environmental externalities is nuts and will slow the rate of change to cleaner road transport. To the detriment of Victorians and the world.

  3. Des Scahill says

    As a matter of general interest, California (population approx 39.2 million) now has around 600,000 EV’s on its roads.

    Australia (population 25.7 million) has an estimated 20,000 EV’s

    From those figures you can calculate that:

    California has 1 EV for every 65 of its residents
    Australia has 1 EV for every 1,286 residents.

    As well, by 2025 California will complete its closure of its last nuclear generation plant, which came into commercial operation in May 1985. The initial decision to close the plant was made in 2016, and the first of its 2 reactors will be decommissioned by 2024.

    A nice 2016 photo of the plant can be seen here :

    To quote from that same 2016 web-page : “Environmentalists have pressed the Nuclear Regulatory Commission to close Diablo given its proximity to seismic faults in the earthquake-prone state. One fault runs 650 yards from the plant’s reactors.

    Worries of earthquakes fracturing the facility have been a dominant theme since Pacific Power Gas & Electric Co (PPGE) first announced plans for Diablo Canyon in the 1960s. The project helped consolidate opposition to nuclear power within the country’s then-fledgling environmental movement.”

    I’ll note in passing that it took 25 years (from 1960 to 1985) for the nuclear plant to progress from the initial planning stage and reach a commercial production level

    PPGE is California’s largest energy utility and also operates in the USA. The utility finally reached an agreement in 2016 with environmental groups and state politicians to replace production at the Diablo Canyon nuclear plant with solar power and other energy sources that do not produce climate-changing greenhouse gases.

    PPGE will take responsibility for the decommission costs of the nuclear plant, in exchange for an agreement with California to supply it with power solely from renewable sources. Those costs will be recovered from ratepayers, with rapidly rising estimates of those now amounting to $US 4.8 billion according to this article in the Tribune newspaper at

    Further on. the Tribune article notes that:

    “PG&E is saying it will cost their customers significantly more to decommission Diablo Canyon than any other nuclear plant in U.S. history,” ANR Executive Director Rochelle Becker said in a news release. “Given their abysmal stewardship of our ratepayer dollars, we have absolutely no reason to believe PG&E won’t handle this undertaking with the same callous disregard they have shown gas pipeline and fire prevention safety.”

    When operating, the nuclear power plant supplied some 9% of California’s electricity demand, which is a fairly significant single chunk of energy supply to have at just one facility, in an earthquake prone area on the ‘ring of fire’, a mere 650 metres from a visible fault line.

    Along with the US$ 4.9 billion problem above, California has also been simultaneously dealing with it’s problem of aging natural gas plants which are near the end of their useful life. Some have already been closed. That too is a can of toxic worms.

  4. Although on face value this proposal looks bad, I’d like to know more about it.
    I’m happy for electric vehicles to pay a tax like this, but only if they are planning to put more upfront incentives in place to reduce the upfront cost of an electric car (which based on my experience, seems to be the main complaint most car buyers have).

  5. Alan Gregory says

    2.5 c/km for EVs is reasonable to fund the roads. This should be accompanied by a refund of at least 2.5 c/km as zero emission vehicles don´t contribute to the enormous cost to the health service due to air pollution.

  6. Kerry MacDermott says

    The mooted tax on EVs is not a “new” tax. It is a proposal to recover from the owners of electric vehicles the revenue which goes towards upkeep of our roads. At present this is paid by drivers of petrol and diesel vehicles through the “taxes” on fuel paid at the bowser.
    Seems perfectly sensible to me. If electric vehicles start to become more popular in Australia, the cost of maintaining our roads and related infrastructure will be borne by an ever-smaller number of drivers while owners of EVs contribute nothing.
    Perhaps it is the wrong sort of tax, but the sad fact is that every road user needs to pay to have the roads repaired and new ones built. Perhaps the trucking industry should pay more since they do most of the damage (in addition to causing most of the pollution and noise) but that’s another story.
    What l would like to see is a study on what proportion of electric power used by EVs in Australia comes from non-fossil sources and what proportion comes from the largely coal-powered grid. Also, perhaps, how many of the (largely wealthy) owners of EVs pay for their own electric power and how many charge up during the day at no cost to themselves in the secure executive car park. THOSE could be useful indicators of whether EVs are likely to make any useful contribution to saving the world.

    • John Ryan says

      What a presumptuous and I would suggest unsubstantiated critique of EV car owners. As an aware and concerned resident of planet earth, and one who is on a pension, I have contributed a significant portion of my retirement savings to installing solar power and purchasing an EV. I find it sad that other citizens haven’t come to their senses and are making their personal sacrifice to help alleviate the potential catastrophe of global warming. John Ryan Tasmania

      • Kerry MacDermott says

        Thanks for your comment John.
        I hadn’t actually intended my piece to be a critique of EV owners, and l think if you read it carefully you’ll find the only presumptive suggestion is the widely-acknowledged fact that EV owners tend to be wealthier, simply because at their present state of development they are a good deal more expensive than a petrol or diesel car of the same size and quality.
        On the other hand, there are undoubtedly a number of people who buy EVs principally because of a laudable desire to make a contribution towards saving the planet, and find the extra initial cost is a price they are prepared to pay.
        There is also a respected/respectable view amongst sceptical scientists that the EV will only ever make a very marginal contribution.
        I try and keep an open mind and while l have installed solar PV on my roof (with Finn’s assistance) and solar hot water, I’m not into buying new cars and even if l was, I’m not convinced that the economics of current EVs are anywhere near to meeting my needs.

        • Peter Fell says

          Hi Kerry
          Your assumption that EVs will only ever make a marginal contribution to reducing GW pollution is based on what data by which scientists? My suggestion is internal combustioned engined cars (ICE) made a huge difference to the air quality in Beijing when residents swapped from bikes to cars en masse and you only have to eat the pollution in Bangkok to know just how bad ICE vehicles can make the very air we try to breathe

  7. Peter Hormann says

    Will I only be taxed for kilometers I drive in Victoria? If I drive interstate will I still need to pay a Victorian road tax for non-Vic kms? If I live on the NSW/Vic border how will the road tax work?

  8. Someone has to tell Dan that GM, Ford and Toyota no longer build cars in Vic.
    Fuel excise has been going straight into general revenue for decades and has no direct relationship to the cost of building and maintaining our roads. Further, our roads benefit all of us whether we own a car or not, farmers, and industries could not get their products to market without them, and so it goes right down the chain to the pensioner catching the bus to visit the doctor. “User pays” is a good policy but some users pay in many ways and others not at all.

  9. Shane T. Hanson says

    I love this idea…..

    It’s about time the greenies stopped free loading and their commie whining on every subject, that the tax payers have to foot the bill for.

    Personally I think it should be doubled to pay for all the hardware and charging stations and higher capacity gridding that has to be done.

    And electric vehicles don’t pollute? Ahem? But the magic power stations do.

    So I am all for the fossil fuel industries AND the fuel powered vehicles.

    I am also for fitting a stack of solar panels on the car port or garage, to keep your own vehicles charged and running.

    I’d rather see a decentralised state wide power production system composed of solar, wind, hydro and some decent Christian black coal fired power stations….

    I’d prefer white coal but Jesus saw fit to make in scarce quantites (diamonds), and it’s hard to get by the billions of tons.

  10. Kerry MacDermott says

    You’re absolutely correct that fuel excise is not a ‘hypothecated’ tax and therefore it goes into general revenue rather than direct into roads.
    I’ve always understood that a high proportion of it is spent on maintaining roads and building new ones, which must soak up a great deal of revenue.
    Perhaps this is not the case? I guess it will vary from one state to another

    • Bill Schmidt says

      Fuel Excise tax is used to give the politicians another pay rise. Thanks Victorian Government, I just ordered a Camry hybrid, I think I’ll move to another state.

  11. Des Scahill says

    Fuel excise tax for a motor vehicle is currently .427 cents a litre, according to this web page at the Australian Tax Office:,-paying-and-rates—excisable-fuel/Excise-duty-rates-for-fuel-and-petroleum-products/

    Assuming an ‘average’ car does 10 km to the litre, that means you’re currently paying .427c x 10 or $4,27 in excise tax to travel 10 km. . An EV vehicle would instead pay .025c x 10 or 25 cents in total.

    IThose numbers all depend of course on how old your vehicle is, how long since you did a tune-up, whether your’re using an ethanol blend, how many km per litre YOUR current car actually gets etc

    So its going to affect everyone differently. .

    Assuming I’ve done the above sums correctly, It’s pretty clear that the eventual loss of revenue to State Governments if all vehicles became EV’s is massive,

    Inevitably, other taxes of some kind will need to be introduced to replace that overall loss of revenue, and perhaps also cut-backs in existing budgets of other government departments unrelated to transport as well.

  12. Simon Miller says

    The “dumbness” of this government beggars belief. One hand giveth while the other taketh away. “Hey let’s give you a rebate for solar but let’s tax your zero-emissions vehicle.” I could give you twenty reasons why this tax is insane but I can no longer be bothered. My old man’s smokey old 2007 diesel gate Passat will pay less tax than a brand new Tesla Model 3 running the same kms. How stupid is that?

    We know that a user pays scenario must come in as the transition to EVs inevitably occurs but why start the tax now when we need the transition to be as rapid as possible? Dumb…dumb…dumb.

    • Ronald Brakels says

      That is a good summary of how I see the situation.

    • Kerry MacDermott says

      Interesting that you mention your old man’s smokey 2007 diesel Passat.
      It’s well within living memory that diesel engines were encouraged because they were going to save the world from hydrocarbon pollution.
      What were they thinking?? Everyone had known for years that diesels were the filthiest, stinkiest, most revolting engines on the planet. These were going to save us??
      Now diesels are (rightly) banned from many cities around the world because they are the filthiest, etc…
      This is how the scientists are going to save the world?
      Taking the long view, are EVs the answer or are they just a fad? Many think ‘green hydrogen’ is the answer but hydrogen is expensive to produce and has a very low energy density. And it’s hard to store.
      I think the technology to get us out of this situation hasn’t yet been invented.
      Just my two pennyworth…

  13. Greg Wootten says

    Solution is to reduce the the fuel excise and hit everyone with a milage based excise. That’s where we’re headed but that’s too unpopular and probable too hard to run just yet.

    A few facts about EV pollution
    10kW is equivalent to a liter of fuel diesel or petrol
    My PHEV does 50km on 10kW or 2L/100km
    A Tesla does 400km on 60kW or 1.5L/100km

    Run on solar solar mix or brown coal that craps on any diesel/petrol for carbon emissions.

    Also V2G is a huge solution in capturing excess and peak daily renewables and feeding back into the grid.We need charging points and beefed up grids and smarts to do this but it is THE virtual power plant

    It will be local flexible but I doubt the AEMO can get their heads around it

    My PHEV is currently averaging 2L/100km on petrol so I’m already paying excise for my freeway/country runs. Again it’s country efficiency is 6l/100km OK for a 1.8t vehicle.

    But get used to the new tax it’s coming to get us all

    • Kerry MacDermott says

      Greg l thought the fuel excise was a mileage-based tax. The further you travel, the more fuel you have to buy?
      I drive a classic 20 y.o. Euro 1.8t which cruises at 6-7 litres/100km but when the need arises has the power of a well-developed V8. Consumption then averages something over 8.
      I’m no expert but l feel that for Australian conditions the PHEV may make more sense unless all your motoring is city centre or inner suburban. Range anxiety must be a very stressful experience…

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