School of Civil Engineering

This article was written by Jake Whitehead from The University of Queensland for The Conversation.

In recent years, false claims have circulated that electric vehicles are “breaking our roads” because they don’t use fuel and so their drivers don’t pay fuel excise.

Heeding such concerns, both the Victorian and New South Wales governments are reportedly considering a new tax for electric vehicles. It follows a report by Infrastructure Partnerships Australia which recommended a per-kilometre tax for electric vehicles.

But this shortsighted approach risks killing the golden goose of our transport system. Such a tax would limit the economic, health and environmental benefits promised by electric vehicles which, together, far exceed any loss in fuel excise.

Instead, Australia needs a mature public discussion about holistic road tax reform to find a fair and sensible way forward.

The problem is structural

Fuel excise is built into petrol and diesel prices, charged at around 40 cents per litre. For more than 20 years – well before the introduction of electric vehicles – net fuel tax revenue has been declining, largely due to improvements in vehicle efficiency, meaning engines use less fuel.

But if we take into account fuel tax credits – subsidies for fuel used in machinery, heavy vehicles and light vehicles on private roads – gross fuel tax revenue has actually increased in recent years.

This suggests the tax suffers from a structural problem. Simply applying a new tax to electric vehicles won’t fix it.