Treasurer Jim Chalmers revealed that future governments might consider imposing a road user charge on electric vehicles (EVs) as a substitute for fuel excise, to fund road upgrades. This idea has been endorsed by experts for some time, pointing out the potential decline in fuel excise revenue as electric vehicles become more prevalent.
Studies indicate that, on average, electric vehicles weigh more and could impose double the stress on roads compared to their petrol counterparts. This might escalate road maintenance costs in the future.
Addressing the national press club during the launch of the Intergenerational Report, Dr Chalmers acknowledged the looming decline in fuel excise revenue and the subsequent discussions about road user charges. When questioned about potential negative perceptions of such a charge, he responded, “In the upcoming years, our government and likely subsequent governments will grapple with this revenue challenge.”
Michael Bradley, the managing director of the Australian Automobile Association, supports EVs, highlighting their environmental benefits. Yet, he emphasizes the need for a fair system to fund road maintenance. With the transition from internal combustion engines, the federal government stands to lose a significant chunk of revenue. Currently, the government collects around $13.7 billion annually from fuel excise.
Bradley cautioned that without adequate preparation, a sharp drop in fuel excise could lead to a decline in road quality, stressing the need for tax reform in the transport sector.
The IGR report anticipates that structural economic shifts will strain the revenue base in the coming decades. It highlights the projected decrease in indirect revenue sources due to the greening of the transport sector and changing consumer behaviours, which could reduce fuel and tobacco excise revenues.
Furthermore, the report predicts the impact of rising temperatures on various sectors, especially in Western Australia and some regional areas. Dr Chalmers emphasized the importance of global and local efforts to mitigate climate change’s effects to safeguard industries, communities, and individuals in Australia.
For the latest retailer news and information, check out the ServoPro website or to speak to us on how we can help your business contact us.