The Federal Government is reportedly considering a new road user charge (RUC) for electric vehicles (EVs). With the increase in EV ownership, the government is exploring ways to ensure that all drivers contribute to road maintenance. Currently, EV owners in Australia do not pay fuel excise taxes.
According to a report from Drive.com.au, Federal Treasurer Jim Chalmers reportedly told a Business Council of Australia that an EV road user charge is “on the agenda”.
The rise in electric vehicle sales has led to a reduction in fuel tax revenue. This has created a need for alternative methods of funding road infrastructure. The introduction of a road user charge for EVs would ensure that these drivers contribute fairly to road maintenance. It would be similar to how petrol and diesel vehicle owners currently pay for road upkeep.
Initial Efforts that Introduced RUC for EVs
The idea of a road user charge was first discussed in 2023, but progress slowed. Now, with renewed discussions, there is potential for the charge to be introduced as part of a wider vehicle tax reform. This move aims to create a more balanced and sustainable taxation system that reflects the changing automotive landscape.
In Victoria, a similar road user charge was introduced for electric vehicles in 2021. However, it was repealed by the state’s Supreme Court in 2022, after the court ruled that the charge was legally flawed. Despite this setback, the concept of a road user charge for electric vehicles remains on the table at the federal level, with the government considering new ways to implement such a policy.
New Zealand has also implemented a road user charge for electric vehicles. Introduced in 2022, the charge requires electric vehicle owners to pay based on the distance they drive. This helps fund the country’s road maintenance. New Zealand’s experience could offer valuable insights as Australia considers its approach to EV taxation.
As electric vehicle numbers continue to rise, introducing a road user charge could play an important role in ensuring the long-term sustainability of road funding. It would also provide a fairer system for all vehicle owners.
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