The Australian federal government is considering implementing a nationwide road user charge for electric vehicles (EVs) as a way to recoup lost revenue from the declining fuel excise, according to a recent report.
Treasurer Floats the Idea
Federal Treasurer Dr. Jim Chalmers reportedly raised the possibility of an EV road user charge – a fee based on kilometers driven – at a Business Council of Australia event last week, as reported by the Australian Financial Review. Chalmers previously discussed a national EV road user charge at the National Press Club of Australia in August 2023, but details remain scarce.
Fuel Excise Decline Drives the Need
The push for an EV road user charge stems from the anticipated decline in fuel excise revenue as EV adoption increases. Currently, the fuel excise stands at 50.6 cents per liter. With the CSIRO forecasting that 97 percent of light passenger vehicles in Australia will be electric by 2050, the government is looking for alternative revenue streams to fund road maintenance and infrastructure.
State-Level Attempts Thwarted
EV road user charges have been introduced at the state level in Australia, with Victoria leading the way in July 2021. However, the Victorian charge was later deemed an excise by the High Court of Australia, rendering it unconstitutional.
Victoria had charged EV drivers 2.8 cents per kilometer and plug-in hybrid (PHEV) drivers 2.3 cents per kilometer. New South Wales and Western Australia had also planned similar taxes for around 2027, while South Australia reversed course after a change in government.
Industry Calls for a Fair and Equitable System
The Australian Electric Vehicle Association (AEVA) advocates for a universal road user charge that doesn't discriminate based on fuel type, proposing a weight-based system instead. They argue that heavier vehicles, regardless of powertrain, cause more road damage.
The Australian Automotive Dealer Association (AADA) is also urging the federal government to introduce an "equitable national road user charging system" that doesn't discourage the adoption of hybrids and EVs. The AADA emphasizes the importance of a nationally consistent approach, following the invalidation of state-based charging systems.
Budget and Election Loom
The 2025-2026 federal budget is scheduled for release on March 25, 2025. A federal election is also expected in April or May of this year, making this a key period for policy announcements and debate.
