Why Australian motorists could be taxed for every kilometre they drive as petrol cars are phased out

A leading economist has warned Australian motorists will be taxed for every kilometer they drive, as phasing out petrol cars will blow a huge hole in the budget.

A large-scale switch from petrol cars to electric vehicles is being considered as part of Labor’s plan to cut carbon dioxide emissions by 43 percent by 2030, which was passed by both houses of parliament in September.

But the discussion paper on the federal government’s National Electric Vehicle Strategy recognizes that such a shift will lead to a massive drop in the money raised by the existing fuel tax, which is nominally used to fund maintenance of the country’s roads. .

“They need to find an alternative source of income,” BAEconomics director Brian Fisher told the Daily Mail Australia.

“The kinds of things that come to mind are distance traveled taxes.”

The government’s discussion paper indicated that the country may be heading in that direction.

“Planning is necessary as future fuel tax revenues fall due to lower consumption of petrol and diesel,” the report said.

“While this revenue is not currently earmarked for road spending, it is an important source of funding.

“In the long run, Australia needs a more sustainable and fairer way to pay for roads.”

Excise taxes on gasoline and diesel generated $19.2 billion in revenue in fiscal year 2021-2022, the Treasury Budget papers showed.

The semi-annual halving of excise taxes to 22.1 cents per liter, which ended in late September, cost the budget an estimated $3 billion in revenue.

Victoria has been requiring electric car owners to declare their mileage since last year, making it the first state to impose tolls on private cars.

dr. Fisher, a former Commonwealth government official, said the model could be rolled out nationally to make up for the future drop in fuel taxes.

“Somehow someone has to make up the difference or else you have to cut corners,” he said.

“Certainly, the current administration has shown no enthusiasm for cutting government spending, so I imagine compensatory taxes should be introduced.

“If you want to keep tax revenue at the same level as it is now, you need to find a new source of revenue and if you think road tax is the right way to do that, then the obvious way is to increase revenue.” on a kind of tax on the distance traveled.’

The federal consultation paper on Climate Change, Energy and Environment explored the idea of ​​extending the remote toll collection, which already applies to petrol or diesel trucks, to electric trucks.

“We already have a system for setting nationally consistent charges to cover road use costs associated with heavy vehicles,” it said.

‘That system has been around since 1996.’

The user pays principle could apply to future electric trucks because heavy vehicles cause more road wear, but the paper did not explicitly advocate extending that charge to electric cars.

“Part of that reform is exploring more direct charging options for heavy vehicles, including electric heavy vehicles,” the paper said.

Queensland Nationals Senator Matt Canavan, a former economist, said he would be concerned about privacy violations if private cars were to be charged.

“Trucks are different because they are commercial vehicles, private vehicles – there is a privacy issue,” he told Daily Mail Australia.

“I am against these kinds of laws mainly because I am concerned about the privacy concerns of governments who know where everyone is going and traveling and how that would be enforced.”

More than 95 percent of cars sold in Australia have petrol or diesel engines, including hybrids.

Australian motorists still overwhelmingly favor utes, with the Toyota HiLux and Ford Ranger the two best sellers last month.

Most of the cars sold in Australia are SUVs, with few electric versions as buyers queue for a Toyota LandCruiser, Toyota RAV4 or Mazda CX-5.

All-electric cars had a market share of 4.4 percent of all 95,256 vehicles sold in August, according to data from the Federal Chamber of Automotive Industry.

In August, 3,498 electric cars from China were sold in Australia, with models from Tesla, Polestar, Volvo and BMW accounting for 82.6 percent of the 4,235 electric cars ordered.

The Tesla Model 3, made in Shanghai, was Australia’s fourth most popular car, with 2,380 orders taken, making it even more popular than the Toyota LandCruiser four-wheel drive.

From January to August, electric cars had a smaller market share of two percent, with 14,524 sold so far out of 717,575 of all new vehicles ordered.

But sales of Chinese-made electric cars were 9,762, representing a 67.2 percent share of the Australian electric vehicle market.

The Tesla Model 3 is Australia’s most popular electric car, with a starting price of $63,900.

It has been coming from China instead of the United States since last year, with 7,037 sold so far in 2022.

The Tesla Model Y — priced from $72,300 and also made in China — found 1,017 new owners last month in its first month going on sale in Australia.

Elon Musk’s electric car brand also makes the Model S and Model X at Fremont, California for the Australian market, but so far this year the only Teslas sold locally have been made in China.

The Chinese MG ZS EV is Australia’s most affordable all-electric car with a starting price of $44,990 to drive, but none were sold last month.

Climate Change Minister Chris Bowen said transport is Australia’s second largest source of national emissions, noting that “boosting the uptake of electric cars will be key to helping Australia reach net zero by 2050”.

“This is a real consultation to inform the right policymakers so that we can see more affordable electric vehicles on our roads,” he said.