The Australian High Court has made a landmark ruling declaring Victoria’s EV tax (Zero and Low Emission Vehicle Distance-based Charge Act 2021) unconstitutional. The ruling also removes the Victorian government’s road user charge on electric, hydrogen, and plug-in hybrid vehicles. The charge levied excise duties on vehicles based on the kilometers driven, and the court ruled that only the Commonwealth can impose such a tax. This ruling will likely deter other states from moving forward with plans for similar EV taxes, potentially altering the future of EV tax policy and regulation in Australia.
Business Vicrorias EV Tax
The excise duty for Victoria’s EV tax, implemented in July 2021, charged owners of zero and low emission vehicles fees based on the distance driven. Owners of electric and hydrogen vehicles paid 2.8 cents per kilometer driven, plug in hybrids 2.3 cents. The tax was implemented to make up for the lost revenue from the fuel excise tax charged on petrol and diesel vehicles. This was the basis on which the tax was justified. However, the tax was struck down in court after two Victorian EV owners argued that the tax was unconstitutional, claiming it was an excise tax which can only be charged by the Commonwealth.
High Court’s Landmark Decision
High Court has made a landmark ruling which has created a precedent for the challengers. The ZLEV Act was declared unconstitutional under Section 90 of the Australian Constitution. The majority of judges pointed out that the EV tax was a duty on the consumption of goods like an excise tax and not just a road user fee. This ruling impacts the previously held interpretations that permits state consumption payroll tax. The only duty the state government can charge is road user EV-specific tax. This excise duty limitation firmly ensures that only the commonwealth will charge the other EV-specific taxes. .
Ramifications for Other States and Policies
Victoria’s court defeat will undoubtedly have a significant effect on other Australian States. Other states have proposed or are currently considering road user charges for EVs. This ruling promotes the states to adopt a more cohesive approach to EV road taxes. Many state and industry stakeholders have publicly requested not to implement punitive taxes that hamper the decarbonisation initiative to discourage EV adoption.
Financial and Policy Impact
The government of Victoria has pledged to refund electric vehicle owners who paid the now-defunct tax. There are estimates of millions being reimbursed. This puts pressure on the government to change transport and environmental policy revenue frameworks. This also widens the focus from punitive revenue frameworks for clean transport to equitable and sustainable road funding mechanisms, taking environmental and national carbon reduction targets into account.
Table: Overview of Victoria’s EV Tax Details
| Vehicle Type | Charge Per Kilometer (cents) | Duration |
|---|---|---|
| Electric and Hydrogen | 2.8 | Since July 2021 |
| Plug-in Hybrid | 2.3 | Since July 2021 |
Frequently Asked Questions
Q1: Why was Victoria’s EV tax declared unconstitutional?
A1: The High Court deemed it an excise duty, which is a tax that only the federal government can levy under the Australian Constitution.
Q2: Does this mean there are no EV road charges in Australia?
A2: States can not impose such excise duties, however, the federal government may implement a national policy for EV road charges.
Q3: What about the EV owners that paid the tax?
A3: The government of Victoria has agreed to reimburse electric vehicle owners the tax paid under the now-defunct levy.
