Road-user charge on the horizon for EV drivers
The Federal Government is considering a road-user charge for electric vehicle (EV) drivers.
So, why does the government want to charge EV drivers for using the roads and when could it start?
What is the fuel excise
Before discussing the EV road-user charge, it’s important we provide a bit of background. Australian motorists don’t directly pay to use the roads unless they’re driving on a tollway. However, if you drive a petrol or diesel-powered vehicle, you pay a fuel excise – a Federal Government tax – every time you fill up at the petrol pump.
Currently, the fuel excise – which is included in the price of petrol – is 51.6 cents per litre. Unlike registration and driver’s licence fees, which go to state and territory governments, the fuel excise is collected by the Federal Government. This is then used to fund transport infrastructure. Basically, as a motorist, you contribute to the upkeep and development of the roads you’re using.
What about EV drivers?
In 2022, electric cars only made up about one per cent of light vehicle sales. Now, one in 10 of new cars sold in Australia are electric. Several EV cars are now among the most popular on Australian roads.
Motorists who drive electric don’t need to fill up their vehicles with petrol, which means they don’t pay the fuel excise and aren’t paying to use the roads. Why is this a concern?
Well, the money the Federal Government receives through the fuel excise is used to repair and upgrade Australian roads. According to the Productivity Commission, Australia’s $12 billion a year fuel excise is in “terminal decline” as more drivers switch to fully electric and hybrid vehicles.
As a result, the Federal Government is looking at how it can charge road users who no longer pay the fuel excise.
The proposed solution is a distance-based charge for EV drivers, but that hasn’t been confirmed. In New Zealand, the government has rolled out a road-user charge that covers all light vehicles. This means all motorists, regardless of vehicle type, pay a set fee for every kilometre they travel.
Didn’t South Australia propose a road-user charge a few years ago?
A few years ago, the South Australian Government proposed introducing a road-user charge in 2027 along with a set of incentives for people to purchase electric vehicles. However, that was reversed following a change in government.
Victoria started a state-based road-user charge scheme in 2022 and collected more than $3.9 million in EV and plug-in-hybrid vehicle revenue during the 2022-23 financial year. However, that had to be refunded after a high-court ruling found the Constitution states only the Commonwealth can impose customs and excise duties.
What’s next?
No decision has been made on when a road-user charge will be introduced or how it will be implemented. The federal Treasurer has stated that he will hold further discussions with state and territory governments in coming weeks.
What RAA thinks
RAA has long called for the Federal Government to develop a fairer, more transparent, and sustainable model for road funding.
With the growth in EVs and more fuel-efficient vehicles, some motorists will be paying a road user charge through fuel excise while other motorists will pay far less or pay nothing at all.
Moving to a distance-based charge for all light vehicles will ensure that all motorists, no matter what car they drive, will contribute fairly to the cost of building and maintaining a safe and efficient transport network.
Do you need car advice?
RAA members can contact our free Car Advice service for answers to their car questions.
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