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Victoria Makes Sustainability Profitable with an Electric Vehicle Tax

Victoria’s electric vehicle tax has proven that the government cares more about money than sustainability, according to Sam Hibbins, Greens MP for Prahran.

A woman pumping her car with petrol (Photo: Ruby Littler)

Mr Hibbins said the EV tax is a “cash grab” which gives the Victorian Government “a source of revenue they didn’t have access to before”.

The tax disincentivises and punishes “people who are making the right decision,” Mr Hibbins said.

The Greens party are pushing for an appeal against EV owners paying the 2.5 cents per kilometre tax, issued under threat of deregistration, according to Mr Hibbins.

Economist Saul Eslake said the “obvious issue” is EVs use roads like petrol and diesel vehicles without paying equal tax.

Fuel-tax adds to the economy's reliance on fossil fuels and this profitable industry will have to be outsourced for Australia to achieve net-zero emissions, according to Mr Eslake.

The transportation industry is one of Australia’s biggest fossil fuel emitters, according to the Clean Energy Regulator’s State and Territory Emissions Profile 2019-20.

“Motor vehicle manufacturers will stop producing petrol and diesel operated vehicles because there won’t be a market for them and revenue from the current system of fuel excises will drop to zero,” Mr Eslake said.

Mr Hibbins said the tax is “another costly barrier for people wanting to buy EVs and reduce emissions” and governments should wait until there is an increased uptake on roads.

Fuel-tax in Australia is not legally directed to roads and Mr Hibbins said this “misnomer” is used by the Victorian government to “muddy the waters and generate a bit of support for the EV tax”.

Although not legally required, 98 per cent of net fuel-tax in 2020 was invested into land transport infrastructure, according to Australian Automobile Association’s 2021-22 Pre-Budget Submission.

The Coalition could consider federal taxation over EV incentives because of Australia’s reliance on fossil fuel industries, according to Mr Eslake.

“The Coalition has, so far successfully, sought to use the issue (climate change) as a ‘wedge’ to gain votes in areas that would normally be solidly Labor… benefiting from large donations from fossil fuel interests,” Mr Eslake said.

VicRoads applies the EV tax at 2 cents per kilometre less than fossil fuel powered vehicles, however Mr Hibbins said EVs should be excluded

The environmental benefits of owning an EV could be psychological, according to Mr Eslake, as EV’s sustainability depends on the electricity source.

“In Victoria most of the electricity is produced from burning brown coal, the most emissions-intensive form of electricity generation currently in use anywhere in the world,” Mr Eslake said.

Mr Hibbins said EVs emit less air pollution than fuel-powered vehicles regardless of the electricity source and reliance on 100 per cent renewable energy “goes hand in hand” with EV incentives.

“Worldwide governments are putting in incentives to make electric vehicles cheaper and this tax is taking us in the exact opposite direction,” Mr Hibbins said.

The scrappage schemes and $15,000 incentives introduced in the US and across Europe “could go very close to putting electric vehicles on price parity with petrol vehicles,” Mr Hibbins said.

Norway will ban the sale of fossil fuelled vehicles by 2025, according to their Ministry of Transport.

Mr Eslake said international trade pressure will push Australia away from its fossil fuelled economy and towards revenue from sustainable industries.


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