Victoria Becomes First Australian State to Introduce ‘Modest’ Electric Vehicle Tax

March 17, 2021 Updated: March 17, 2021

The Victorian Labor government is set to become the first Australian state to introduce a new tax on electric vehicles.

The proposal has prompted criticism from industry groups, the Greens, and the opposition, who say it’s yet another tax imposed on Victorians.

Under the proposed bill introduced by the Victorian Labor government in state Parliament on Wednesday, electric vehicles owners would pay an additional $330 per year. In contrast, plug-in hybrid vehicle owners will be charged an extra $260 per year.

The yearly charge is base on the state government’s fee of 2.5 cents/km for electric, zero-emission and hydrogen vehicles and 2 cents/km for plug-in hybrid-electric vehicles. The tax, which is set to become law by July 1, is expected to raise $30 million over four years.

Treasurer Tim Pallas said the revenue raised would be used to build electric vehicle charging infrastructure and maintain the state’s road network.

Pallas added that the new “modest distance-based charge” will “ensure all motorists pay their fair share to use our roads while we continue to incentivise the use of zero or low emissions vehicles.”

While less than one percent of Australian vehicles are electric, Pallas anticipates uptake will grow as they reach price parity with petrol cars by 2025.

However, Victorian Greens spokesperson for transport, Sam Hibbins, said his party is opposed to the proposal saying that Labor is instead disincentivising electric vehicles users. Hibbins urged other crossbenchers to oppose the bill.

“The government needs to introduce policies to subsidise electric vehicles and make them more affordable. That’s what’s happening all around the world,” he said.

“If this bill was to pass, Victoria would become the only government in the world that’s making EVs more expensive, not more affordable.

Opposition Leader Michael O’Brien said it was the Labor government’s 30th new or increased tax since coming into government.

“The state government has introduced yet another new tax on Victorians,” he said. “This time, they’re actually putting their pockets before the planet.”

Kirk Coningham, Chief Executive of the Australian Logistics Council (ALC)—the national body representing the freight logistics industry—said Victoria’s new tax proposal only complicates the process of transporting freight safely and efficiently.

“For those operating businesses in the freight logistics sector, this means a daily confrontation with a hodgepodge of legislative and regulatory hurdles,” Coningham said.

The new state tax is expected to pass the lower house where Labor holds the majority.

However, under the COAG Reform Fund Amendment (No Electric Vehicle Taxes) Bill—which closed for submissions on March 4—the Federal government may penalise other states’ for taxing electric vehicles owners.

AAP contributed to this report.