Victoria to pay drivers back for unconstitutional electric vehicle tax

Victoria’s Treasurer Tim Pallas has conceded the government received advice it must pay electric vehicle owners over its controversial tax slammed as ‘a cash grab’.

Victorian Treasurer Tim Pallas has conceded that the state government will have to fork out $7m in repayments to people unconstitutionally taxed for driving electric vehicles.

The High Court handed down a landmark ruling last month that found the state’s EV levy was unconstitutional.

The controversial tax charged electric and hydrogen vehicle owners 2.8 cents and plug-in hybrid vehicle users 2.3 cents for each kilometre travelled.

The tax - which was introduced in 2021 - was expected to raise about $30m over four years.

The state Treasurer said interest would be paid on top of the rebate.

“It might take a few months as we identify who they are, but the advice that I’ve received is yes, there is an obligation to repay it,” Mr Pallas said outside parliament on Wednesday.

“I think we’ve even decided to be sufficiently generous, albeit that there isn’t an obligation to pay interest, to pay the interest on the retention of those funds.”

Victorian Treasurer Tim Pallas. Picture: NCA NewsWire / Luis Enrique Ascui

Mr Pallas said the money collected from the tax was a “relatively small amount”.

“What is not a relatively small amount is the reimagining of the constitution by the High Court. That is going to cause very substantial problems for every state,” he said.

“We put this on the agenda to discuss in the treasurers’ meeting on Friday with the federal Treasurer … they’re giving a very clear indication that they recognise that this is a problem and that they will work with the states to try and fix the issue.”

State Opposition Treasury spokesman Brad Rowswell called out the government for acting too slow and said work could have been done to pay people back immediately after the court’s decision.

“The government has known since October that this tax is an illegal tax,” he said.

Electric vehicle driver Kathleen Davies believes her successful High Court challenge will promote the uptake of EVs.(Taken from ABC)

“For goodness sakes, they’ve known since October that this tax was collected illegally, courtesy of the High Court decision. They didn’t have to wait for advice.

“The government should have done the right thing at that time and got in place a system to return this money to Victorians who need it now more than ever in their back pockets.”

EV vehicle owners Christopher Vanderstock and Kathleen Davies led the legal action to challenge the constitutional validity of the Zero and Low Emission Vehicle Distance-based Charge Act, with lawyers calling the tax “a cash grab” and industry groups labelling it as “worst electric vehicle policy in the world”