Australia's EV tax discount is being wound back. Here's what it actually means
Australia's EV FBT exemption is being phased out from 2027. Here's what's changing, who it affects, and whether it should influence your next car decision.
Should electric vehicle drivers pay a road user tax?
Should EV drivers across Australia be paying a tax for every kilometre they drive? It’s not in place yet and the details are yet to be ironed out, but the Federal Government has confirmed a road user tax is on the cards for electric vehicles. So is this a case of EV drivers simply paying their fair share, or would a road user tax be unfair?
First, what’s the deal with this road user charge?
If you haven’t heard already, Federal Treasurer Jim Chalmers recently held a roundtable with leaders in the transport and infrastructure industries to float the idea of an EV road user tax and start developing a roadmap for it.
What is a road user tax?
A road user tax or charge applies based on distance travelled (often factoring in vehicle weight too), and would be a way of gathering funds for road construction and maintenance from drivers. The idea has gained recent ground as Aussies increasingly adopt hybrid and electric vehicles, with almost one in ten new car sales now electric.
Why are EVs prompting a road user tax?
EVs and hybrids use less liquid fuel. Right now, a fair chunk of the money Australia uses to build and fix its roads comes from the 51.6-cents-per-litre fuel excise, which drivers pay at the bowser. Hybrid vehicle drivers require less liquid fuel, so they pay less fuel excise. Meanwhile, full EV drivers currently pay none at all.
On top of this, traditional internal combustion vehicles are becoming more fuel efficient, further reducing this avenue of government revenue.
Put simply: petrol consumption and road usage used to be closely linked, but this link is weakening over time. This means the government is looking at a different way to make up that lost revenue for road upkeep.
So far the Treasurer hasn’t announced how the road user tax would be calculated, but has confirmed it would only apply to EVs and not those already paying fuel excise.
Has anyone else implemented a road user tax?
The Victoria and NSW Governments have both raised plans to introduce a road user tax in the past, but these both hinge on the Federal Government’s power to implement it on a nationwide basis.
