NSW seeks five-year moratorium on electric car taxes
The biggest state has called on federal and state governments to start placing large orders for electric cars to create a second-hand market that could make the high-tech vehicles affordable for middle-class families.
NSW Minister for Transport and Roads Andrew Constance said a four- to five-year moratorium was needed on electric vehicle taxes, and criticised Victoria for introducing a 2.5¢ per kilometre charge, from July, on Teslas and other battery-powered cars. South Australia plans a charge, too, although it hasn’t set a rate.
“I think it’s ridiculous that we have got state jurisdictions setting different charges – it’s better to have a nationally consistent approach,” he told The Australian Financial Review.
“Everyone wants to see lower taxes, but if we are going to see scale and uptake in light of the significant health and environment costs [of regular cars], we are better to forgo the revenue over the next four to five years until we start to see penetration and go forward from there.”
How or whether to tax electric cars has emerged as a headache for policymakers. Industry lobbyists, including car manufacturers, are putting huge pressure on state governments to subsidise the retail cost of electric cars, which reported a fivefold sales increase in April from a year earlier.
Federal and state treasury departments are worried about a long-term decline in revenue from fuel excise, after adjusting for inflation, as drivers switch to electric cars and more-efficient petrol and diesel engines.
Fuel excise is the most important indirect tax after the goods and services tax, which means the growth in electric cars poses a long-term threat to government budgets.
“If we’re going to be able to afford to maintain our transport infrastructure, we need to find a way to replace fuel excise in a way that doesn’t stifle technological transition,” said Michael Bradley, the Australian Automobile Association’s managing director.
The association has been campaigning for about a decade for excise to be gradually replaced by charges based on how far vehicles travel.
While both major parties have accepted the logic behind a switch, according to Mr Bradley, potential political opposition has stopped any change. Part of the problem is most people don’t realise petrol is taxed at 42.3¢ a litre.
Some experts say a tax on how far vehicles travel is fairer than one based on petrol use because it means drivers are treated equally. Environmental advocates and car manufacturers want electric cars to receive tax exemptions to drive sales.
The Electric Vehicle Council said it would like the federal government to remove the GST and luxury car tax on electric cars, and for all stamp duty and registration charges to be removed.
The decision by Victoria and South Australia to introduce road-user charges for electric cars – and NSW’s consideration of the tax – could be the start of a gradual shift in the taxation of driving from the federal government to the states.
Some federal officials believe that allowing the states, which build and maintain many roads and bridges, to introduce a replacement tax for fuel excise would be sensible because it could create a direct connection between road taxation and spending.
Other lobbyists, including the Automobile Association, would prefer a national system to avoid confusion and different rules across the states.
Federal government forecasts predict the uptake of electric vehicles will increase from 1 per cent to 26 per cent by 2030.
Extracted from AFR