29 March 2021

Barr rules out electric vehicle tax but road user charges are coming

| Ian Bushnell
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Shane Rattenbury

ACT Greens leader Shane Rattenbury with a charging electric vehicle. The Greens wanted subsidies for new EV buyers. Photo: File.

Chief Minister and Treasurer Andrew Barr has ruled out a specific tax on electric vehicles but that doesn’t mean EV drivers will get a free ride when it comes to maintaining the ACT’s roads.

Both South Australia and Victoria have decided to impose a road user charge on electric vehicles. 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, while SA is yet to announce a rate.

Mr Barr said all states and territories would move to some form of road user charge over the next decade, likely replacing the combination of flat fee registration charges and fuel excise, as it declines with the increasing number of EVs on the road.

But he rebuffed suggestions that the Commonwealth, which is responsible for the fuel excise that contributes to road upkeep through consolidated revenue, should administer any road user charge so it would be uniform across Australia.

”The Commonwealth has no useful role to play here,” he said. “If implemented correctly, road user charging models can correct vertical fiscal imbalances while supporting the uptake of EVs and providing more sophisticated systems to support the management of costs for registration.

”This will also ensure that revenue raised locally will be retained locally. If the Commonwealth become involved then it is certain that revenue will be bled from the ACT to other jurisdictions.”

READ ALSO The best places to buy electric cars in Canberra

Mr Barr said any road user charging measures considered in the ACT in the next four years would be voluntary for vehicle owners and not be limited to electric vehicles.

”That is, it would be opt-in, open to all vehicles and designed to incentivise less driving, saving households money and reducing congestion on our roads,” he said.

”For instance, if the driver is a minimal road user, they may opt for a per kilometre or block kilometre charge that is less than the amount they would otherwise pay on the flat registration fee.”

Climate change and EV activists say the Victorian and SA moves will deter drivers from buying electric cars and slow the transition to non-carbon transport, which is crucial to those states meeting their goal of zero net emissions by 2050.

Mr Barr said the ACT Government, which has a 2040 emissions target, was committed to encouraging the uptake of electric vehicles.

”This is an industry that we want to see thrive and we know is critical in our action on climate change,” he said. ”We have announced an extensive support package for EV uptake and offer the greatest incentives anywhere in Australia.”

He said EV buyers did not pay stamp duty, and from next financial year, all new purchases of EVs would receive free registration for two years, while interest-free loans would be available in the next year to support people who wanted to buy an EV.

”We are also delivering more EV charging stations, and enacting regulation to future proof new constructions with built-in charging infrastructure while investigating measures to retrofit existing buildings,” he said.

Mr Barr said that next year after consultation with the EV industry, the ACT would set an ambitious target for EV new vehicle sales in the ACT by 2030, becoming the first jurisdiction in the country to do so.

He said Australia did not make cars so the market would be determined by decisions of international governments and manufacturers.

”EVs are coming fast and, at some point in the not too distant future, manufacturers will no longer make internal combustion engine vehicles,” he said.

”Technological improvements and scale of production increases over the next few years will continue to see the price of EVs fall so they provide a competitive market alternative – our incentives are designed to accelerate that uptake,” he said.

The ACT’s incentives would have been even more ambitious had the ACT Greens had things all their way in Parliamentary Agreement negotiations with Labor.

They wanted a $10,000 subsidy for buyers of new EVs.

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Rego is a small part of the charge we get each year – most of it is insurance.

Step 1. Take away bus services from people in the outer suburbs.

Step 2. Introduce a per kilometre car tax that will hit people in outer suburbs who have to drive further proportionally harder.

Capital Retro10:30 am 04 Dec 20

What is “an outer suburb” and not everyone in the ACT uses their cars to drive to inner suburbs proportionally harder (whatever that means)..

If you don’t know what an outer suburb is and you don’t know where the highest number of people work in Canberra, then I can’t help trying to explain simple division.

Talk of new taxes when politicians get a free ride regardless of any levies

Don’t politicians pay tax too?

HiddenDragon6:37 pm 27 Nov 20

“But he rebuffed suggestions that the Commonwealth, which is responsible for the fuel excise that contributes to road upkeep through consolidated revenue, should administer any road user charge so it would be uniform across Australia.

”The Commonwealth has no useful role to play here,” he said. “If implemented correctly, road user charging models can correct vertical fiscal imbalances…”

Fascinating attitude to federalism from a politician whose home town (and thus, too, his job) only exist because of federalism.

In a world where all road user charges were collected by states and territories, Canberrans could presumably expect to face additional charges for using the roads of NSW and other states – and likewise the residents of those states who visit Canberra.

Road usage charges have been discussed among economists for several years now as a form of taxation to replace fuel excise. One of the main issues that such a charge presents is how you determine the distance driven. Self reporting? Odometer readings? The consensus seems to be that some form of GPS tracking with automatic reporting and this represents major privacy concerns. I look forward to how the various governments propose to solve this.

As to Barr’s claim that ”The Commonwealth has no useful role to play here.” “The fuel excise that contributes to road upkeep through consolidated revenue” it is not an hypothecated tax and so the monies raised can be spent on things other than road upkeep. I wonder what taxes Barr proposes that the Commonwealth raise to cover any shortfall if they are not involved in road usage charges. I also assume that the ACT will no longer put its hand out for road funding if the Commonwealth devolves road usage charges to the states and territories.

Capital Retro6:51 am 28 Nov 20

Wouldn’t it be smarter for the Commonwealth to asses a new tax on tyres to replace the exiting fuel excise one? All road vehicles including EVs use tyres and the amount of kilometres travelled determines when they need to be replaced and this can be policed and enforced as it is now. The concessions given to farm and other off road (mining) vehicles could be transferred from fuel to tyres and include tracked vehicles.

It could be collected at the point of sale – just like tobacco tax is. I know, it’s too simple for public service bean-counters to take on board.

We could even include bicycle and electric scooter tyres.

rationalobserver3:39 am 29 Nov 20

Even better, stamp duty on all forms of transport at the point of sale.
Cars, Trucks, bikes, trams, skate boards, wheel chairs, prams, planes, etc.
No less silly than some of the other suggestions going around.

Capital Retro4:58 pm 29 Nov 20

That’s a different regime and generally there was one like this called “sales tax”. It was replace by the GST about 20 years ago.

The fuel excise is a consumption tax so it needs a consumable to tax that all vehicles use and tyres tick that box.

That could be quite distorting because tyres wear at extremely different rates and driving styles. But the idea/concept I think is sound.

rationalobserver7:24 am 04 Dec 20

All transport devices are consumable items. A one off tax at the point of first sale would be the easiest to administer, and would go some way to curbing unnecessary consumer demand for scarce resources.

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