Victorian EV road user tax ruled unconstitutional

A controversial road user tax introduced by the Victorian state government has been overturned by the High Court of Australia.

The High Court handed down the judgment on Wednesday saying that the EV tax in Victoria is unconstitutional because it was deemed to be a charge on the usage of electric vehicles, a power that only the federal government can exercise.

The tax was introduced in July 2021 by the Victorian Government but was met with criticism by proponents of clean transport who said that introducing a tax at a time when uptake was low would stifle the fledgling market.

Under the “EV tax”, electric vehicle owners were required to pay between 2.3 cents and 2.8 cents for each kilometre whether driven within or outside the state.

The case was filed by Chris Vanderstock, an electric vehicle owner and nurse manager, and Kathleen Davies, an engineering consultant, who argued that states lack the constitutional authority to impose such a tax.

The Victorian Ombudsman recently discovered that the "legislation is being administered unjustly," foreshadowing a judgment in favour of the claimants.

Their attorney hailed the ruling as a significant decision in constitutional law.

As a result of the ruling, a precedent has been established that might prevent other states, including NSW which has said it will introduce a similar tax from 2027 or when EV uptake reaches 30%, from enacting similar laws.

NRMA's support for the introduction of a road user tax in NSW stems from a recognition of a need for simpler implementation of all motor vehicle charges and fees, and was given as a result of inertia at a federal level.

Ad hoc policy ruling a “great outcome”

In a statement, Vanderstock said the ruling “is a great outcome not only for Victorian electric vehicle drivers, but for all Australians.

“Electric vehicles are fun to drive, but they also help decrease carbon emissions, reduce pollution, and improve our health.

“We believe that Victoria’s electric vehicle tax discouraged people from buying EVs, and punished existing EV owners who are trying to do the right thing.

It was an ad hoc, piecemeal policy which undermined our collective efforts to reduce emissions from transport.”

CEO of the Electric Vehicle Council Behyad Jafari said in a statement that, “There is nothing inherently wrong with road user charges, but they should never be calibrated to discourage the take up of electric vehicles.”

What is the outcome of the case?

"The electric vehicle industry warned the Victorian Government this policy was muddleheaded years ago, and the offer has always been on the table to work with the state on a more sensible approach.

"Any road user charge scheme should be national and we now look forward to working with the federal government on sensible road funding reform, without singling out drivers who are trying to do the right thing.”

The High Court has instructed the state government to cover the expenses.