26 November 2020

Accelerate EV take-up before hitting tax brakes

| Ian Bushnell
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Hyundai Ioniq

An electric Hyundai Ioniq outside Parliament House. Australia needs to power up. Photo: File.

It’s generally accepted that if you want to encourage something you don’t slap a tax on it. Yet both South Australia and Victoria have decided to impose a road user charge on electric vehicles despite having targets of reaching net-zero emissions by 2050.

The ACT is more ambitious, aiming for 2040, and has a range of incentives to take up EVs, understanding that transport is the next big sector to attack after achieving 100 per cent renewable energy sources for electricity.

Victoria plans to impose a 2.5 cent a kilometre charge on EVs and a 2c/km charge on plug-in hybrid cars from next July. South Australia is yet to announce a rate.

The new charges have appalled EV advocates who fear they will only put the brakes on the fledgling sector by making them more expensive at a time when scaling up will lead to cheaper vehicles and accelerate the rollout of charging networks.

READ MORE Here’s what EV buyers can expect from the new ACT Government

An analysis by Dr Jake Whitehead, from the University of Queensland’s Dow Centre for Sustainable Engineering Innovation, says Federal Government modelling suggests EVs would make up about 65 per cent of new car sales by 2050, based on existing policies, but this would fall to 40 per cent or 4.9 million vehicles under a 2.5c/km tax rate.

It also found a 2.5c/km tax would equate to a $4,500 increase in a vehicle’s purchase price.

Advocates also fear that combined with the inertia at Commonwealth level, the new charges will mean Australia being left behind as other nations such as the UK plant the foot and ban the sale of new petrol and diesel cars by 2030.

The issue is falling revenue from fuel excise, which doesn’t go directly to roads but generally equates to the amount spent on them.

EV drivers using our roads should pay their fair share and, in any case, why should those who can afford to buy an electric vehicle get a free ride? So the arguments go.

It also has been argued that implementing a road user charge now while there are so few on the road prepares the ground for future widespread application and allows drivers to get used to the idea.

These are, of course, finding favour with governments that need to maintain their roads.

READ ALSO Probing the polls: hotel quarantine and rego for every road user

What is lost in this traffic jam of arguments about road funding and equity, is the race against time to lower emissions enough to avert catastrophic global warming.

If that is the primary goal, then the sooner EVs become cheap enough for people on average incomes to buy and for charging stations to proliferate the better.

A kneejerk imposition of a road user charge will only impose an unnecessary barrier to people wanting to make the transition, and go-it-alone decisions will also create a patchwork regime across Australia.

The states and territories and the Commonwealth need to work together to agree on the timely introduction of road user charges and appropriate incentives to achieve a transition to non-carbon transport that makes a real dent in emissions.

Now is the time to help people into the EV driver seat as much as possible, as well as think about how the decline and eventual demise of fuel excise needs to be managed.

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the trouble with introducing road user charging for EVs is that within a few years everyone will be driving one. so although it is cast as a tax on those nasty rich Greenies driving around in their ‘virtue signalling’ Teslas, it will actually be soon paid by everyone driving a car.

there are two big problems.

1. it requires all mileage to be logged. this will inevitably mean every car must be fitted with a tamper proof tracking device, which will need to be automatically uploaded on a regular basis. I’m sure this will delight all car owners and raises major issues around privacy.

2. People in regional and remoter areas will inevitably campaign heavily for either lower per km charges or to be exempt altogether, based on the fact they will face higher charges. Just wait for the howls of protest from the National Party when they realise that every car owner will need to pay it. In fact I’m waiting for the first National party MP to try and recast it as a congestion charge and argue that it should only be on city folk…..

There is zero need for there to be logging of mileage through tracking devices, unless governments want time of use, individualised road charging (i.e. different charges for different roads), or congestion/cordon charging.

If its a sole flat rate per km, the system to do it has already been in place for decades. I.e. exactly what the tax office does for people who claim business kms. Require people to make a declaration what they say is the truth, and have a way to do random compliance auditing on it.

Its only highly complex charging that needs a more detailed system – something that may be in the plans down the track, but at said point when every vehicle already will have telemetry to deliver it.

I think there is validity to the claim that now is a perfectly sensible time to introduce reforms to introduce Road User Charging for EVs, before every man and his dog is used to having a ‘free lunch’. We’ve seen just how hard it is to introduce taxes once people are used to not paying for things – on the grand scale, carbon taxes being the perfect example.

Ideally, we would move to road user charging for all vehicles, but much harder to do for petrol/diesel vehicles given fuel excise – though I’m sure there is creative ways to achieve that outcome if desired.

What it is not a sensible time to be doing in my mind is trying to raise significant revenue from EVs through the scheme. Surely existing vehicle related charges could be reformed for EVs, so that they are paid through a road user charging scheme (rego fees), but in a way so in total they pay no more. Then when upfront purchase parity is reached, the charges can begin to increase towards the desired long term level (I do not buy an argument that EVs should not pay their fair share over the medium to longer term – which is basically what the EV lobby is saying at the moment).

As for that Queensland analysis – I’d like to see a peer review of it. I’m not sure a comparison to ‘current policy settings’ makes sense when thinking about 2050. There is no way in hell, heaven or high water that EVs will be paying nothing come 2050 toward their use of the road network, so that seems a very unrealistic assumption, designed to only tell one side of the story.

Capital Retro8:19 am 27 Nov 20

Like the cosseted and tax free cyclists in the ACT, the EV lobby apparently want the same treatment.

your usual nonsense retro. cyclists pay taxes too (in fact the vast majority are car owners as well). would you like to impose a charge on pedestrians as well for the use of the footpath?

There is no connection whatsoever between fuel excise and road maintenance. it is paid into consolidated revenue. It is just another tax! (which actually goes to the Commonwealth, whereas user charging would go to state governments)

There is no particular reason why we should have a special tax for any road users per se. In my view the use of the roads should be free to all and funded through general taxation.

However, we should charge users of all vehicles for the environmental and health damage they cause. For those with fossil fuel driven vehicles this would include air pollution, the damage to peoples lungs from particulates, and the emissions of greenhouse gases. For EVs there might be a much smaller charge to cover some of the environmental costs of the battery production and disposal (any greenhouse gas emissions should be covered from a proper carbon tax). We should also continue to charge compulsory insurance payments.

Capital Retro6:20 pm 27 Nov 20

Do cyclists pay rego fees and CTP in the ACT?


And where I live most pedestrians walk on the road due to the absence of footpaths.

The rest of your usual rant concerns issues I didn’t raise.

Greens still want a taxpayer funded subsidy of $10K for every EV purchased in the ACT.

Good reply. I would also add a road maintenance levee, calculated to cover the damage the individual road user makes. No charge to any road user if the damage they would be charged for, cost less or equal to the cost to administer this. That would likely mean no fees for pedestrians and those riding bikes.

Good reply dolphin. I forgot to say who I was replying to.

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