The Australia Institute ran an excellent webinar (Stop the Electric Vehicles Tax) this morning opposing the Electric Vehicle Tax announced by Victoria and SA. An EV tax may end up being imposed by other state governments, including NSW’s and Queensland’s, and we may see one announced in the 2020-21 state budget when it’s handed down next Tuesday. Earlier this month, the Financial Review’s Queensland bureau chief Mark Ludlow wrote Electric vehicle taxes expected across Australia. That said, I haven’t heard any rumours about a Queensland EV tax, and I can’t find any commentary from the Treasurer regarding whether he’s considering one, so this could be a false alarm.
In the webinar, the Australia Institute’s Chief Economist Richard Denniss made some very compelling arguments for why an EV tax shouldn’t be imposed, including those he made in a Guardian Australia article published today (Instead of taxing electric vehicles, heavy vehicles should pay more for the damage they cause):
…while it’s true that as the number of electric vehicles rises in Australia fuel excise collections may fall, that doesn’t make it a good idea to tax the use of electric vehicles. The amount of money Australians spend on GST-free items such as private school fees and private health insurance has risen, but that doesn’t mean we have to increase the GST on books and clothes.
We tax cigarettes and alcohol because we want to discourage their use. We subsidise vaccinations and pharmaceuticals because we want to encourage their use. If we want to encourage more people to buy low-emission vehicles we should subsidise them and if we want to discourage people from buying them we should tax them.
In the webinar, Richard made the important point there’s no direct link between money raised by the Commonwealth through fuel excise and money spent on roads by either the Commonwealth or states and territories. It’s not earmarked for that purpose. It goes into the big pot of consolidated revenue and you can’t say any one dollar in that pot is spent on anything in particular.
An EV industry representative who spoke in the webinar, EV Council Chair Tim Washington, is worried the EV tax will seriously hamper the take-up of EVs in Australia. Apparently, there are fewer than 20,000 EVs in Australia at the moment, so EV taxes will raise very little revenue (i.e. only $1 million in its first year in SA), but they may slow the take-up rate of EVs. This would be unfortunate, given EVs could make a significant contribution to reducing Australia’s greenhouse gas emissions. Regarding what state Treasurers are saying about how an EV tax needs to be imposed to pay for road maintenance, Tim said “It’s an absolute lie”, making the same point Richard did about the non-existence of a direct link between fuel excise and spending on roads.
It’s highly likely we’ll all be driving or riding in EVs one day, and I’d prefer not to have to pay a tax on the kilometres travelled. Our governments extract plenty of tax revenue from us already. I’d prefer that the Queensland Government restrain the growth of its highly paid bureaucracy rather than impose a new tax. Let’s hope we don’t see one introduced in the budget next week.
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