NSW Treasurer flags distance-based tax on electric vehicles

NSW Treasurer Dominic Perrottet has flagged imposing a distanced-based tax on electric vehicles but not before a more substantial take-up of the technology on the state’s roads.

Mr Perrottet revealed he will take a “holistic” tax plan for electric vehicles to this year’s state budget, but said he doesn’t want it to impede early growth in the technology.

“Over time, people who use the roads should pay for the roads, just like they do with fuel excise, but what we don’t want to do is impede innovation and take-up of electric vehicles,” Mr Perrottet told the Herald on Wednesday.

“We’re working on a holistic package to announce in the budget.”

It is understood the NSW approach will consider investing in electric vehicle infrastructure and be markedly different to the new Victorian system, which will tax electric vehicles at 2.5 cents per kilometre.

Mr Perrottet has been working with Environment Minister Matt Kean on the strategy, which will eventually introduce a distance-based tax on the vehicles.

“A user charge is where the future lies but what’s important is that we promote, not impede, the take-up of electric vehicles,” Mr Perrottet said, adding that he originally aimed to unveil the strategy last year.

“I was looking to have something finalised in the half-yearly review but my thinking hadn’t settled.”

Governments across the country are grappling to find a sustainable tax solution to bankroll road and infrastructure funding as federal fuel excise tax revenue declines.

Drivers of petrol and diesel vehicles pay GST at the rate of 10 per cent on their fuel purchases, plus the government collects a fuel excise, which is set at 42.7 cents per litre, though that will continue to decrease as electric vehicle popularity grows.

Mr Perrottet said he wanted the state government’s solution to ensure everyone who used the roads paid for them.

However, any immediate move by the government to impose a new tax on electric vehicles will likely encounter opposition from sections of business and environmental groups.

In a speech to the Herald’s Infrastructure Summit on Thursday Uber Australia general manager Dominic Taylor will urge state governments to incentivise electric vehicles, not tax them.

“While the rest of the region is seeing fast adoption of electric vehicles, the Australian landscape remains bleak,” Mr Taylor says in his address, seen by the Herald.

“Timing is everything, and unless you’re going to have a significant incentive package, or only charge a token amount, you will dampen uptake and Australia will remain at the back of the pack.”

Uber has committed to all its rides being taken in zero-emission vehicles by 2040, and a decade earlier in the US, Canada and Europe.

Mr Taylor is also set to announce that Uber will halve its service fee for drivers of battery-powered electric vehicles between July 2021 and June 2022.

“We can’t remain stuck in this public-private waiting game, watching and waiting for others to move,” he says, pointing out that electric car sales sit at less than 1 per cent in Australia.

Mr Taylor is expected to say that road user charges make sense in the future, but not during the infancy of electric vehicles.

“Tackling climate change will require an all-in effort across both the public and private sectors,” he will say.

Government sources speaking on condition of anonymity last year said the state was considering investing the money generated from the new tax into infrastructure to encourage the technology, including charging stations.

Extracted from The Sydney Morning Herald

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