AAA Supports Electric Vehicle Usage Tax

Electric vehicle tax - Australia

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A poll commissioned by the Australian Automobile Association indicates the majority of Australian drivers support an electric vehicle usage fee or tax – and so does the AAA.

Australians currently pay a fuel excise tax of 41.8c per litre of petrol or diesel they buy. Fuel excise is the largest source of road-related revenue, around  $18 billion a year before excise rebates. Australian EV owners of course bypass this tax, using the mains grid and home solar systems for electric car charging.

Fuel excise revenue has been dropping and increased uptake of electric vehicles will put more downwards pressure on how much is collected in the years ahead. It’s a situation that hasn’t escaped the notice of Australia’s ICE (internal combustion engine) vehicle owners.

The Australian Automobile Association describes itself as the peak organisation for Australia’s motoring clubs and their 8 million members. It commissioned a survey of 1,500 Australians that found 76 per cent of respondents believe owners of electric vehicles should be financially contributing to transport infrastructure. Almost half believed it’s “unfair” EV owners avoid paying fuel excise.

In an interview on 2GB yesterday, Automobile Association of Australia Managing Director Michael Bradley suggested electric vehicle owners should be brought into the road use tax system sooner rather than later.

“I think what the AAA and motoring clubs want is a situation in which we can bring electric vehicles into the tax system in a sustainable way and do so in a way that doesn’t disincentivize their uptake in Australia,” he said.

Mr. Bradley said he didn’t want to see a heavy-handed tax on technology, but the money needs to be there for public transport and roads in the future. He has suggested a “discounted rate” for electric vehicles; but what that rate might be and how it would be applied wasn’t detailed.

The full 2GB interview can be found here.

Australia’s Fuel Excise Tax And Roads

If an electric vehicle usage tax/fee was to be introduced expressly for the purpose of contributing to road infrastructure funding, it would have to be pretty low to be fair.

An important point when considering such a scheme is the proportion of fuel excise tax that actually goes towards financing road infrastructure. Last year, SQ’s Ronald wrote on the controversial topic of electric vehicle subsidies and mentioned:

“Australia already has a hefty incentive for people to go electric and that’s the 40 cent per litre fuel excise on petrol and diesel.  Of this about 10 cents goes to pay for roads with 30 cents going into general revenue.”

Just 10c – or thereabouts.

Ronald also detailed the savings electric vehicles can bring to Australia, and not just their owners. He estimated just the environmental and health costs associated with emissions from petrol and diesel at around 84 cents per litre, so far more than the fuel excise collects.

So, it seems EV owners may already be paying their way by not burning a fuel that causes environmental havoc and human misery; both of which will have an increasingly hefty financial cost to Australian taxpayers.

With electric cars still pretty pricey in Australia (for now) and any signal of an EV usage tax – whether it goes ahead or not – potentially acting as a disincentive to uptake, perhaps supporters of such a move should be mentioning these points when discussing.

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