‘Unconstitutional’: Victoria’s controversial EV tax to be dumped after bombshell ruling

Victoria is set to scrap a controversial tax - dubbed the “worst electric vehicle policy in the world” - after a bombshell High Court court ruling.

A controversial tax on electric and hybrid vehicles in Victoria will be ditched after a landmark High Court ruling found the levy was “unconstitutional”.

The tax - dubbed the “worst electric vehicle policy in the world” - saw Victorian EV drivers slugged over two cents per kilometre driven on public roads across the country.

EV drivers Chris Vanderstock and Kath Davies began their legal battle against the state government in 2021, arguing only the Commonwealth had the power to impose such a tax.
On Wednesday, they emerged victorious after a majority of High Court justices agreed.

Their lawyer David Hertzberg hailed the court’s decision as “a landmark constitutional decision.”

“Today’s judgment means that Victoria’s electric vehicle tax is invalid. It also sets a precedent which will likely prevent other states from implementing similar legislation,” he said.

The High Court ruled that the state of Victoria’s electric and hybrid vehicle tax was unconstitutional, following a legal challenge by two EV drivers. Picture: NCA NewsWire / David Crosling

Under the current strict system, EV drivers are forced to submit photographs of their vehicle’s odometer to the state government annually.

Failure to do so can result in car registration being cancelled or significant fines.

The average EV driver will save roughly $378 per year if the tax is scrapped as anticipated.

Victoria is the only state that has a distance-based tax for electric vehicles in place.

However, the ruling is expected to shelve the plans of New South Wales and Western Australia to implement similar schemes in July 2027.

The Victorian Government was expected to raise $30 million through the tax over four years.

The tax involved EV and hydrogen vehicle owners being charged 2.8 cents for every kilometre driven during the year, while plug-in hybrid vehicle owners were charged 2.3 cents. Picture: NCA NewsWire / David Crosling

Ms Davies expressed her delight after the two-year legal battle, telling reporters that the nation lags behind the rest of the world in adopting EVs.

“Now is not the time to tax electric vehicles – it’s the time to be doing everything we can to encourage people to switch to cleaner cars,” she said.

Mr Vanderstock underscored the broader significance of the decision, asserting that the piecemeal policy approach had undermined collective efforts to reduce emissions.

“We believe that Victoria’s electric vehicle tax discouraged people from buying EVs, and punished existing EV owners who are trying to do the right thing,” he said.

The court’s verdict was based on the argument that states and territories lacked the authority to impose such a charge, and other states are expected to shelve similar schemes. Picture: NCA NewsWire / Naomi Jellicoe

In response, the Herald Sun reported Victorian Greens transport spokesperson Katherine Copsey MLC called upon the Allan government to refund all-electric vehicle users subject to this “backward, unfair tax.”

She urged the government to repeal the tax in parliament, accusing Victorian Labor of hindering the reduction of transport emissions.

“Labor must now refund all electric car owners who paid this tax and re-introduce subsidies and incentives for people to switch to electric cars and other climate-friendly forms of transport,” she said.