Electric Vehicles
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Worth noting that the fuel excise and other vehicle owner taxes aren't directly tied to road spending - like pretty much any tax, it all goes into the pool and then funds are spent as needed.
The heavier EVs' effect on roads will be interesting, but really at less than 1% of vehicles it is a drop in the well as far as road damage goes at this point.
Fuel excise is also dropping steadily as more efficient vehicles enter the market. Anything with one of those stop-start engines is causing just as much wear and tear on the road system by weight as a similarly sized ICEV, but will pay far less in excise for the same distance.
Depending who you ask, a road tax to replace fuel excise for EVs is just a stop-gap, with a few bodies urging a whole-of-market approach at a national level:
Electric vehicle taxes not needed to offset falling fuel excise revenue: report
The report argues the federal government should instead upgrade the nation’s energy grid and push the mining sector to convert from diesel to electric-powered off-road vehicles.
**Electric vehicle taxes not needed to offset falling fuel excise revenue: report** Declining fuel excise revenue doesn’t need to be replaced with new taxes on electric vehicles, a report has found, arguing the federal government should instead upgrade the nation’s energy grid and push the mining sector to convert from diesel to electric-powered off-road vehicles. The Institute for Energy Economics and Financial Analysis (IEEFA) report argues obstacles are being put in the way of large-scale take-up of electric vehicles because of concerns about the potential loss of revenue from fuel excise, without recognition it has been dropping for years with little impact. Instead of state-based taxes, it urges the federal government to accelerate the mining industry’s shift towards electric vehicles by winding back the fuel rebate for off-road vehicle use, and consider a 10-year, 0.1¢/kWh tax on retail electricity to create a $7 billion fund to upgrade Australia’s energy infrastructure. The federal government collects 42.3¢ in tax on every litre of petrol and diesel sold at the pump in Australia and paid by drivers using public roads. In 2021, gross revenue from the fuel excise tax was $19.2 billion and net revenue was $11.6 billion. But despite the growing population, vehicle fleet and total vehicle kilometres driven, revenue from fuel excise continues to decline in real terms as newer, safer vehicles with reduced fuel consumption hit the roads. It has fallen 68 per cent as a share of federal government revenue over 20 years and now contributes only about 2 per cent. The fuel rebate for off-road vehicle use, mainly in the mining sector, is 40 per cent of the total excise raised. IEEFA researcher Owen Evan said proportionally reducing the rebate to zero over 15 years while capping an individual group’s rebate to a maximum of $5 million annually – ensuring no small or medium-sized businesses were impacted – would bring incremental tax revenues from net excise of some $1 billion annually. “Even in the mining industry, this would be a material incentive to implement change, consistent with their own net-zero emissions pledges,” he said. “And our mining industry is a globally significant consumer of trucks and earthmoving equipment. We can have a real impact on this part of the world market.” Australia’s take-up of battery-electric and plug-in hybrid cars has lagged behind many European and Asian nations, accounting for just 0.7 per cent of total car sales in Australia last year. Three states – Victoria, South Australia and NSW – have flagged new taxes on electric cars based on distance travelled. The Andrews government passed laws last month that will charge electric and other low-emission vehicles 2.5¢ per kilometre driven and 2¢ for plug-in hybrids. But IEEFA, a think tank largely funded by environmentally focused private foundations, said states considering their own tax and subsidy structures should concern “all thinking citizens” because “when states drive economic policy, multi-gauge rail networks get developed”. The Australian Automotive Association, the peak organisation for Australia’s motoring clubs, including the RACV and NRMA, has argued that irrespective of technological shifts, the fuel excise is an inequitable tax. It has called for urgent national leadership and co-ordination to move to a single road-user charge. The Federal Chamber of Automotive Industries last month urged the federal government to lead a national overhaul of vehicle registration, stamp duty, licence fees and fuel excise and replace them with a single road-user charge based on kilometres driven. But Mr Evan said the most pressing issue was upgrading transmission infrastructure. Australia would struggle with a scenario of a 20 per cent electrified fleet within five years because there was not yet adequate production, transmission and distribution capacity to charge vehicles, he said. He argued a tax on retail electricity, which would probably cost $60 per household a year, would enable Australia to be ready for conversion when manufacturers suddenly cut off sales of petrol-powered vehicles. “It would maximise the value of Australia’s world-leading rooftop solar and behind-the-meter battery investments, driving decarbonisation while delivering household savings on energy bills at many multiples of the proposed 0.1¢/kWh tax,” he said. -
A road user tax ignores the fact that EVs generally enter the market at a higher price and therefore already pay more in tax.
Even those under the Luxury Car Tax threshold will spend more in tax at point of purchase - if I buy a Nissan Leaf brand new in Victoria, I'm spending $50K compared to a similarly sized ICEV (Mazda 3, Corolla, etc) for around half that price. That is $625 in stamp duty before I've even driven out of the dealer, or enough to cover 25,000 kilometres under Victoria's EV tax (2.5c / km).
And, amusingly, even if I cover those kilometres outside Victoria, I still pay them the tax
Electric cars 'increase government revenue', report claims
Should electric cars be subsidised to help uptake?
**Electric cars 'increase government revenue', report claims** Critics of electric cars say they get a free ride by avoiding fuel excise. A new report argues the opposite. As debate continues to rage over whether electric cars should be subsidised or taxed in Australia, a new report has suggested their uptake could help, not hinder, government revenue – once economic and societal benefits are taken into account. The report, conducted by consultancy firm EY and commissioned by Australia's Electric Vehicle Council (EVC), seeks to examine the suggestion electric cars unfairly benefit from avoiding the government's fuel excise – a tax on fuel and petroleum products that is put towards the maintenance and expansion of Australia's road infrastructure and goes into consolidated revenue. Critics of electric vehicles (EVs) argue they should be subject to the excise, or an equivalent charge, because they use the same road systems as their petrol- and diesel-powered cars. The report acknowledges the average electric car imposes costs on the government estimated at $5879 in lost fuel excise revenue over 10 years, as well as $8585 of lost GST revenue (that would have been spent on liquid fuels) over 10 years. However, the report claimed despite a combined $14,464 in lost revenue over 10 years, an electric car that replaces a petrol car delivers a net government revenue benefit of $1370, or an overall net societal and economical benefit of $8763, over the same 10-year period. To obtain these estimates, EY calculated both the direct and indirect benefits and downsides of electric cars and petrol and diesel vehicles on on a cost-per-kilometre basis – taking into account factors such as fuel excise payments, sales taxes, operational GST, greenhouse gas emissions, noise pollution and implications for the electricity market and public health. The report claims benefits from electric cars – such as an increase in discretionary household spending because of the lower running costs associated with electric cars, or a reduction in direct health impacts from particulates – can counteract the revenue lost from the fuel excise exemption. Matt Bell, EY Climate Change and Sustainability Leader, said it's a complicated issue, adding that EY's report wasn't seeking to refute previous studies examining the cost of electric cars, but rather to provide a summary of their positive effects – and ascribe a monetary value to these benefits. "On the societal side, (electric cars) have benefits when it comes to minimising greenhouse gas pollution and climate change and reducing direct health impacts from particulates," said Mr Bell. "Some of the positive impacts of (electric cars) we didn't even include in the report, because the data is changing too quickly – for example, one of the benefits is they connect into the grid and lower electricity pricing, but the technology is not at scale yet," said Mr Bell. While electric cars don't pay a fuel excise, Mr Bell said the report accounted for the fact they "tend to cost more" than their petrol or diesel counterparts, thus bumping up the cost of registration or luxury car tax paid (even though the LCT exemption threshold is higher for fuel-efficient vehicles). EVC CEO Behyad Jafari claims the report "puts to bed" the notion that electric cars should be taxed in order to compensate for the fuel excise loss. “You often hear this idea that when someone replaces their petrol engine vehicle with an electric car they reduce their tax, because they don’t pay the fuel excise anymore. This analysis blows that argument out of the water,” said Mr Jafari. "The fuel excise is just one tax among many, you have look at the entire plate – EVs have to pay GST on things like electricity that ICE cars don't." Mr Jafari said it was important to put a dollar figure on the societal impact of electric cars and the additional value they provide over their life cycle. "Clean air might not cost you at the pump, but at some point along the chain the government has to pay for these things ... they get the cleaner air, they don't have to pay for the hospital down the line." Geoff Gwilym, CEO of the Victorian Automobile Chamber of Commerce, says any modelling on electric vehicles needed to take into account how they obtain their power by acknowledging that Australia's grid is majority coal-powered. "If you use electricity from a coal-powered power station to charge your (electric car), any benefits would have to be reconsidered – you can't assume they all run on green energy," said Mr Gwilym. In response, Mr Jafari said the report does factor this in – assuming EV owners will be using the coal-powered grid to charge their cars, and looking at the effects of a combination of both coal power and renewable energy being utilised over the 10-year period. Mr Gwilym said electric cars should technically be paying for some sort of fuel excise, given their road use was the same as other cars. "If you have a car running around with the same footprint and the same wear and tear, there has to be an argument that it should be paying the same excise," said Mr Gwilym. However, while Mr Gwilym said the VACC was against subsidising electric cars to encourage their uptake, he acknowledged a new taxation system could be helpful as we move into the era of alternative energy. "I think ultimately governments will move to a road user charging system for petrol and electric vehicles, which means it doesn't matter what vehicle you're in or what fuel you're using, you'll be charged by kilometre based on size, weight or distance travelled," said Mr Gwilym. "We've got a system of taxation that's old and we've got new electric vehicles – how do we get money to help run the road system? We charge vehicles per kilometre on the road like GST and then it equalises any type of fuel whether hydrogen, petrol or electric." Mr Gwilym added: "It's hard for the government to do because they've already got the infrastructure for the fuel excise so this would mean retrofitting things to cars or getting people to make an annual statement on the amount they've travelled." Mr Jafari agrees this kind of approach would make "a lot of sense", but he'd still like to see electric vehicles receive a tax break compared to petrol or diesel cars. "Using a more holistic pricing method is something that makes a lot of sense – if we already had that, electric vehicles could slot in a lot better," said Mr Jafari. "The part of the fee that pays for the road upkeep, that can be the same across (electric) and (conventional) cars, and then the rest can be charged accordingly." -
That last article makes the very good point about the public health benefits of EVs.
I think if you want to tax externalities like road wear, then you need to tax on public health effects as well.
IMHO the simple answer is to introduce and then increase carbon pricing on fuels - fuel-efficient ICEV benefit as well as EVs - and then start moving the goal posts as adoption increases.
As a last note: Victoria's tax may double-charge PHEV owners as they'll pay RUC (at "only" 2c/km compared to 2.5 for EV) and fuel excise when they switch over to the petrol engine. That's a dilly of a pickle.
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@jc said in Electric Vehicles:
@nzzp I'm interested in this too. I'm looking into a PHEV but the one I'm interested in is 375kgs heavier than the petrol version.
are you NZ based? In which case RUC will be the same for passenger vehicles (you shouldn't get close to the limit).
If we're serious about reducing carbon from personal transport, we need to make it a rational financial decision. Calc below
2.3kg per litre of petrol, assuming 12L/100km (for bigger vehicles), and 12,000 km12ar, that gets 3.3T of carbon for a normal car.
Air NZ will offset about 200kg of CO2, for $4.50, so about $100/tonne of carbon. That means a cost of about $330/year to offset the carbon.
Compared to 12,000 km at 8c/km = $1,000 in RUC.
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@nta said in Electric Vehicles:
The report argues the federal government should instead upgrade the nation’s energy grid and push the mining sector to convert from diesel to electric-powered off-road vehicles.
**Electric vehicle taxes not needed to offset falling fuel excise revenue: report** Declining fuel excise revenue doesn’t need to be replaced with new taxes on electric vehicles, a report has found, arguing the federal government should instead upgrade the nation’s energy grid and push the mining sector to convert from diesel to electric-powered off-road vehicles. The Institute for Energy Economics and Financial Analysis (IEEFA) report argues obstacles are being put in the way of large-scale take-up of electric vehicles because of concerns about the potential loss of revenue from fuel excise, without recognition it has been dropping for years with little impact. Instead of state-based taxes, it urges the federal government to accelerate the mining industry’s shift towards electric vehicles by winding back the fuel rebate for off-road vehicle use, and consider a 10-year, 0.1¢/kWh tax on retail electricity to create a $7 billion fund to upgrade Australia’s energy infrastructure.Always the solution for some people; "tax others to fund my interests". Not like Australia doesn't already have disproportionately expensive electricity and completely ignores two fundamental issues:
- Taking the productive areas of the economy to subsidise others, and
- Rio Tinto is investing massively in EV and autonomous vehicles anyway.
The fuel rebate for off-road vehicle use, mainly in the mining sector, is 40 per cent of the total excise raised.
This is a duplicitous argument, it's irrelevant how much of the total is rebated when that's done for the perfectly valid reason that the excise doesn't apply to private roads.
But IEEFA, a think tank largely funded by environmentally focused private foundations, said states considering their own tax and subsidy structures should concern “all thinking citizens” because “when states drive economic policy, multi-gauge rail networks get developed”.
Reminds me of the quote by Franklin Adams: When the political columnists say 'Every thinking man' they mean themselves, and when candidates appeal to 'Every intelligent voter' they mean everyone who is going to vote for them.
The Australian Automotive Association, the peak organisation for Australia’s motoring clubs, including the RACV and NRMA, has argued that irrespective of technological shifts, the fuel excise is an inequitable tax. It has called for urgent national leadership and co-ordination to move to a single road-user charge.
The Federal Chamber of Automotive Industries last month urged the federal government to lead a national overhaul of vehicle registration, stamp duty, licence fees and fuel excise and replace them with a single road-user charge based on kilometres driven.
Not sure they've been paying attention to what's happened to "cooperative Federalism" lately. No State is going to willingly hand those powers to the Federal government.
I also laugh at reports 'conducted by consultancy firm EY and commissioned by Australia's Electric Vehicle Council (EVC)'. If the "Australian Internal Combustion Vehicle Council" commissioned EY, EY would invent externalities that said the opposite.
Ultimately all Australians need to move away from the common misconception that certain payments are directed to road maintenance. It all goes into consolidated revenue.
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@antipodean said in Electric Vehicles:
Not sure they've been paying attention to what's happened to "cooperative Federalism" lately. No State is going to willingly hand those powers to the Federal government.
I don't think it is suggestion change in power - just alignment of process. The states probably won't lose any revenue under most options.
All the states have pretty much some form of stamp or transfer duty, but the rates are sometimes stupidly configured.
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@jc said in Electric Vehicles:
@nzzp So what are your thoughts on PHEVs? Living here in the Bay a full BEV seems a bit risky so far as there aren't a great number of charge points on the way north, so I'm thinking about a petrol hybrid.
I honestly don't know enough. You can see them as having the benefits of both, or the negatives of both.
I know some folk with a plug in hybrid, and it's pretty good for them - they do electric around town, and hybrid on the open road. Compromises the boot space, though. Not sure how it would stack up against a Prius by itself.
So don't really know
You still ahve the maintenance on a motor, but it's got the range, etc. Look at your trips, and how many km you do in your typical trips.Assume you mean Bay of Islands. Great spot, will be up in a week or so for a midwinter escape... better have good weather
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@dogmeat Theoretically. I had the experience of being a passenger in a car when the only charger at Te Haroto was offline. The driver was as stressed out as I've ever seen a driver and we ended up going back to Napier. Fuck that, I'll wait until there's a few more.
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@jc We drove through there 4 weeks ago and it looked like there's three chargers there?
So the signs at Taupo that say chargers every 30 kms aren't right?
Apologies for massive thread diversion but I keep reading stuff about 42% of survey respondents don't feel safe on the streets of Napier after dark and big big problems with aggressive homeless and gang members around Clive Square?
I do agree there's been an increase in the number of beggars but I wondered all over Napier after dark through the square in and out of all the bars and didn't see any sign of aggro or feel in any way threatened. Are people in the Bay getting soft or did I miss something?
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@nzzp Gedoudahere with your Bay of Islands. I mean the proper Bay, the Hawkes one.
I'm looking to buy new so I don't really care about the maintenance part as that is covered in the service plan. I commute from Napier to Hastings (which I would use electric for) but drive to Auckland about every 6 weeks or so. I have no patience for waiting for charging points / charging.
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@dogmeat There is a charger at Te Haroto about 50kms out from Napier. There's supposed to be another one going in at Rangitaiki but I don't know if it's there yet. My experience was that the Te Haroto site was offline. I don't know if that meant out of order or something else. But the lady who was driving was freaking out, partly because the hilly, windy road meant the consumption was a lot more than you'd normally expect I imagine.
TBH it reminded me of my younger days when we used to carry a 5 gallon jerry can in the boot for the times when we'd get have to go into the wop wops. I'm too old for range anxiety!
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@dogmeat said in Electric Vehicles:
@jc We drove through there 4 weeks ago and it looked like there's three chargers there?
Apologies for massive thread diversion but I keep reading stuff about 42% of survey respondents don't feel safe on the streets of Napier after dark and big big problems with aggressive homeless and gang members around Clive Square?
I do agree there's been an increase in the number of beggars but I wondered all over Napier after dark through the square in and out of all the bars and didn't see any sign of aggro or feel in any way threatened. Are people in the Bay getting soft or did I miss something?
There's definitely an increasing Mob presence throughout the Bay. I understand their members have bought up a lot of the properties around Takapau and Waikupurau has a bit of a problem. Hastings is the Mob's birthplace so no surprises they are still around there.
Napier has seen a few incidents with gang violence recently, with drive-by shootings at the medical centre, gang brawls at a park in Taradale, and a couple of other shootings. In town seems to be OK but Ahuriri can get a bit ugly apparently. I have to say I don't feel that threatened, but my young niece and nephews and their friends are very wary when they go out at night. They won't go to the bars at all and they are very secretive about house parties etc. And there are suburbs where they simply won't go. Sad really. It makes me wonder how bad it must be for some of the people who live in the less affluent areas.
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I thought that Napier (the nightlife, not the general crime) has been that way for at least 20 years now?
We did a bit of fighting both there and in Havelock in my school days ... but that was usually stuff spilling over from other things, not from just being in the city.
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@nepia I don't honestly know if it was the same then I wasn't here until 7 years ago. For people like me whose idea of a night out is going to a winery for dinner we're unlikely to come across any aggro, although a couple of gang members recently followed then beat up a random member of the public because his merging at a roundabout offended them.
But the Ahuriri area can be a bit wild-westy by all accounts. A few months back a bloke got shot in the cock (yes really! or as the media termed it "life changing injuries") by someone who I understand was a bit pissed off at getting bounced from a bar. There's often decent sized groups of young women heading down there so that's always going to attract some mouthbreathers.
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@jc said in Electric Vehicles:
So I pushed back against my luddite tendencies but couldn’t go the pure EV route. I got a PHEV hybrid that will do my commute for a couple of days on a charge (76km electric only range) so on a normal week I should use zero petrol. It’s a start I guess.
What flavor? We were looking at a Mitsubishi Outlander, and still might go down that route, but we are waiting to see the new model.
