Commuters subsidising tax breaks for wealthy Kooyong EV drivers: McKenzie

Coalition transport spokeswoman Bridget McKenzie has left the door open to working with the states on a road user charge, saying tax breaks for drivers of electric cars are being subsidised by the fuel excise paid by commuters who can afford only petrol-fuelled vehicles.

“The reality is under the Labor Party, they’re not contributing,” McKenzie said on the ABC’s Insiders. “The roads are deteriorating and what the Labor Party is expecting is low- and middle-income earners in seats like McEwen, in seats like Hawke, in Bendigo here in Victoria, they’re effectively subsiding wealthier individuals in Kooyong, in Brighton and other areas who can afford to pay for an EV.

Coalition transport spokeswoman Bridget McKenzie.Credit: Alex Ellinghausen

“We don’t think that’s fair. That’s why we didn’t agree with the fringe benefit tax exemption – we’ve been really clear on that – and we want to make sure Australians have choice.”

Opposition Leader Peter Dutton was forced to clarify his stance on the fringe benefit tax exemption for electric vehicles bought through companies’ lease-hire arrangements, after the Coalition released a statement on Wednesday reinstating the plan to scrap the popular deduction, two days after Dutton told a press conference he would not change it. He said later in the week that his answer had been misinterpreted.

While heavy commercial vehicles such as trucks and buses already pay a road user charge of about 30¢ a litre, the push to tax electric cars to help maintain roads had to be scrapped when the High Court ruled in October 2023 that Victoria’s electric vehicle levy was unconstitutional, as only the Commonwealth could impose such an excise.

While Dutton has pledged to cut the fuel excise in half for one year – from 50¢ a litre to 25¢ a litre, costing the budget $6 billion – neither the Coalition nor Labor has committed during the campaign to any form of road user charge.

Peter Dutton fills up during one of more than a dozen petrol-pump photo opportunities to promote his temporary fuel excise cut. Credit: James Brickwood

Treasurer Jim Chalmers’ office said in December last year that the government was “working the states and territories on long-term options in light of the ‘Vanderstock’ High Court decision”.

McKenzie refused to rule out future road user charges as she was asked repeatedly whether the Coalition would create a charging system.

“What we’ve made very clear is everyone who uses our roads should contribute to actually making sure they’re maintained to the prospect standard … that’s what the High Court actually asked Treasurer Chalmers to do, to work with the state governments,” she said.

The Albanese government introduced fringe benefit tax exemptions to encourage the take-up of electric vehicles as part of its pledge to bring down emissions.

The tax break can mean a saving of about $5000 a year on a four-year loan for a $60,000 car.

Originally budgeted at $55 million a year, the scheme is currently costing more than $550 million annually.

About 100,000 customers have taken advantage of the fringe benefits tax incentives since they came into force three years ago. Plug-in hybrid vehicles were included in the scheme up to April 1, but it is now open only to pure battery EVs.

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