Victoria, Australia considers ‘worst EV policy in the world,’ companies respond

In Victoria, Australia, the state government is considering implementing a punitive mileage tax specifically on electric cars. A coalition of organizations, including Hyundai, VW, Uber, ABB, WWF, and others, has come out against the proposal, calling it the “worst electric vehicle policy in the world” in a full-page ad in The Age newspaper in Melbourne.

The Victorian government currently collects no such tax on gas cars — and doesn’t even collect a gas tax at all. It also has no specific electric vehicle incentives to balance out this proposed tax.

The tax would be assessed at 2.5 cents per kilometer and paid each time registration is renewed. Electric car drivers would have to maintain records for five years, with possible penalties if drivers fail to produce these records. No such mileage record requirement exists for gas car drivers, thus adding a burden to EV drivers of time along with a burden of cost.

The average Australian car is driven around 13,300km per year, which means the average tax would be $332 per year, equivalent to $255 in the US. This is higher than any EV tax in the US. But despite the boneheadedness of these EV taxes, which we and others have covered many times before, at least there are also EV incentives available in some of these states. In Victoria, there is no such EV-specific incentive.

And even though the cost for each owner would be higher than anything we’ve seen in the US, it still won’t be enough to make up a significant portion of the budget. Victoria currently has about ~6,000 electric vehicles registered in the whole state, so you can expect 1-2 million in funding from this per year. That’s enough to build about one new kilometer of road, not counting administration fees for the new tax. For comparison, Victoria has more than 155,000km of road.

Companies seized on this fact in their open letter, suggesting that Victoria would be unique in the world by adding an EV tax without any balancing incentives to encourage EV ownership. These companies, including some automakers, stated that these fees would make automakers less likely to send their best new vehicles to Victoria and would jeopardize the state’s ability to meet necessary emissions goals — which it has delayed locking in.

The Victorian government states that it needs to collect these taxes because EVs don’t pay gas taxes and thus don’t contribute to road funding. However, Victoria does not collect a gas tax — the federal Australian government collects that tax. And Australia’s road funding doesn’t even all come from gas taxes anyway, so the idea that there is a direct and essential connection between gas taxes and road funding is false – particularly since road damage is not done by passenger vehicles anyway. For all intents and purposes, virtually all road damage is done by large trucks. Because of the fourth power rule, a fully-loaded semi-truck does ~10,000 times more road damage per mile than a passenger vehicle does.

And those aren’t the only costs from road transportation, anyway. While the last year has been quite chaotic, some might remember that in early 2020, all of Australia was on fire due to massive heatwaves (as reflected in the featured photo for this story). This resulted in poor air quality across the country due to smoke from the fires. These fires were exacerbated by climate change, which in turn is being caused by human fossil fuel burning. Electric vehicles reduce the energy use of transportation and result in lower global warming emissions from transportation, even when charged on coal-heavy grids like Australia’s.

This brings up the matter of Australian industry — coal is king in Australia, the world’s largest coal exporter. Perhaps fossil fuel lobbying is behind this push for EV fees? But this wouldn’t make sense because coal is used for electricity – which can run electric cars. If anything, Australia should be happy to see more demand for one of their signature industries (okay, they shouldn’t, coal is bad and needs to be eliminated immediately, but the point is: we’re not talking about Alberta or Saudi Arabia here, places reliant on oil use, but an industry where jobs will not be lost from a shift to EVs). Australia is also the world’s largest lithium exporter, an element that is crucial to electric car batteries. So electric cars are in their national interest.

And while Australia does have a significant petroleum industry, virtually all of it is in Western Australia, which is outside of the Victorian government’s purview.

According to the Public Transport Users Association in Victoria, Australia, the combined costs of noise, urban air pollution and climate change from vehicles in Australia total $8.4 billion per year. That’s quite a lot more than the proposed $1-2 million, which will be raised by Victoria’s EV tax. Which, again, is punishing the vehicles that are not responsible for these costs, rather than the ones that are.

But Victoria, instead of considering the benefits of converting vehicles to electric, which would save them tremendous amounts of money in health and environmental damages, is instead considering punishing environmentally and socially conscious choices and forcing greater costs on the very vehicles that are already saving money for all Victorians.

While the idea of a mileage tax (with a weight multiplier) for road usage makes sense as it would more fairly distribute costs to the cars and trucks responsible for it, Victoria’s proposed EV tax is not fair. It is a punitive measure directly for electric vehicles from a government that collects no revenue from gas cars and whose residents pay significant costs from the externalities from those same gas cars. These proposals are boneheaded in general, but Victoria’s plan here is unconscionable — bad for Victorians, bad for Australians, and bad for humans.