Australian Government Proposes Road-User Charge for Electric Vehicles
The Australian federal government has identified a national road-user charge for electric and other zero-emission vehicles as a top priority for tax reform, with Treasurer Jim Chalmers confirming the proposal gained significant support at a major economic summit in Canberra this week.
The government is now accelerating plans to introduce the charge as a way to offset declining revenue from the national fuel excise.
The proposed charge is intended to ensure all motorists contribute to the cost of road infrastructure as the country transitions away from petrol and diesel vehicles. Revenue from the fuel excise, a consumption tax currently set at 51.8 cents per litre, is projected to fall significantly with the increasing popularity of EVs.
Following the summit, Mr. Chalmers stated there was “a lot of conceptual support for road user charging” and a “lot of reform appetite in that area.”
Next Steps and Intergovernmental Consultation
While a similar proposal was put to the national cabinet in 2023 without advancing, the government is now “accelerating work” on the policy.
The states and territories have been asked to prepare an options paper for further discussion on September 5.
The government’s plan involves a phased roll-out, initially targeting vehicles that do not pay fuel excise, with a long-term objective of replacing the excise for all vehicles.
The push for a federal charge comes after the High Court of Australia declared a previous state-based road-user charge in Victoria to be invalid.
The court ruled that such a charge constitutes an excise, a form of tax that only the federal government can impose.
While no states currently have a road-user charge for passenger vehicles, the federal government has been running a multi-phase pilot program to test a similar model for heavy vehicles.