‘Great day for electric vehicle owners’ as tax struck down

Government loses landmark case examining the way motorists are taxed in Australia, though there are changes on the road ahead.

Electric cars are growing in popularity. Picture: Thomas Wielecki

Electric car owners are celebrating the end of a controversial tax that required Victorian owners to pay additional fees for every kilometre they drive.

The Victorian Government lost a high court case on Wednesday that will shape future road funding and registration requirements.

A tax on electric vehicle owners has been struck down: Getty Images

Victoria introduced a special road user fee for owners of electric and plug-in hybrid vehicles in July 2021.

Petrol and diesel drivers pay 42.3 cents in tax for every litre of fuel purchased, an excise that electric vehicle owners are not subject to.

So Victorian authorities introduced a requirement for electric car owners to pay additional fees of 2.8 cents per kilometre driven each year, while plug-in hybrid owners must pay 2.3 cents per kilometre, to make up the shortfall in funding used to pay for road infrastructure.

The scheme was supported by other states including NSW, which planned to introduce a similar fee structure in the coming years.

Owners of EVs such as the Polestar, Tesla and Hyundai Ioniq have been given a reprieve. Picture: Thomas Wielecki

But High Court judges ruled it is unconstitutional, as only the Federal Government has the power to establish such an excise.

The electric vehicle tax already faced fierce criticism from the Victorian Ombudsman, which found it was unreasonable, inflexible and unfair.

Electric vehicle advocates are calling for owners to be refunded.

Behyad Jafari, chief executive of the Electric Vehicle Council, said the car industry would push for EV owners to be refunded following the failed scheme.

“We are certainly going to get in touch with the Victorian Government and ask what their plan is,” he said.

Behyad Jafari, chief executive of the Electric Vehicle Council

“It’s only reasonable, given that this was an unconstitutional tax, there should be an efficient process to refunding the money that they’ve raised.

“It is a great day for electric vehicle owners.”

A statement published by VicRoads says “the Government is reviewing the High Court’s decision to understand its implications and how the ruling will be implemented”.

“Motorists who are due to renew their zero and low emission vehicle (ZLEV) registration should continue to do so,” it says.

“We are in the process of contacting all ZLEV customers directly to explain what the decision means for them and any next steps.”

EV advocates including Adiona Tech founder Richard Savoie welcomed the news.

“This ruling ensures that states and territories do not have the right to effectively double-tax those citizens trying to drive the adoption of sustainable transport, who are already faced with excessively high upfront spending when purchasing an EV,” Mr Savoie said.

EVs are cheaper to run than petrol cars – partially due to reduced taxes. Photo: SAUL LOEB / AFP)

Tony Weber, chief executive of the Federal Chamber of Automotive Industries, said there was a clear need to revisit the ways drivers were taxed.

“As the number of zero and low emission vehicles continues to increase on Australian roads, alternatives to the current fuel excise will need to be considered,” he said.

“The FCAI remains in favour of the concept of a nationally consistent broadbased road user charge. This charge should apply to all vehicles – not just electric vehicles.


“In addition to being an alternative to fuel excise charges, an effective road user charge will ideally replace numerous outdated fees and charges that motorists face.

“These can include registration and licence fees and stamp duty.”

Motor Trade Association spokesman Darrell Jacobs agreed that petrol and diesel drivers should not “have to subsidise infrastructure investments on behalf of EV owners”.