AIG Calls for Victorian Electric Vehicle Tax to be Scrapped

electric vehicle tax

AIG, a powerful business lobby in Australia has called on plans for a tax on electric vehicle sales to be scrapped, or at least postponed, until more mainstream adoption takes place. 

Taking aim at the Victorian government’s recent decision to slap electric vehicles with a tax, the Australian Industry Group (AIG) has called for a moratorium on EV taxes, otherwise risking a clear path to meeting new national net zero emissions targets. 

The AIG, who represents more than 60,000 businesses, said that any taxes applied to electric vehicles would deter the public from purchasing zero-emission vehicles, while in actual fact, the government should be incentivising purchases of electric cars. 

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Innes Willox, chief executive of AIG has criticised the move to tax electric vehicle sales, amounting it to “putting the cart before the horse and should not be implemented until clean vehicles are better established and the taxes are better designed.” 

Willox continued to explain that “road infrastructure needs to be paired for and it will be important in the long term to maintain the tax base as batteries and fuel cells replace petrol tanks in Australia’s vehicle fleet.” 

“But Australia is currently well behind our peers in that transition. Our slow uptake of clean vehicles is holding back national progress towards emissions targets – and increasing the pressure on every other part of the economy to deliver cuts,” he said. 

The Victorian state government has put forward legislation that would see a per-kilometer road tax applied to both hybrid and pure electric vehicles. 

If the legislation passes, a road tax of $0.025 cents per kilometer would be slapped onto pure electric and zero emission vehicles, while a $0.020 tax would be applied to plug-in hybrid electric vehicles. 

The Victorian government says that considering EV owners escape fuel taxes and GST on purchases of petrol and diesel, the government is looking to recoup those losses.

The AIG’s climate and energy advisor, Tennant Reed has told The Guardian that the group is taking aim at the electric vehicle taxes after receiving feedback from key stakeholders in its energy and climate leaders and electric vehicles working group. 

Reed told the Guardian that “we’ve had feedback from businesses who want it to be easier to access cleaner vehicles to meet their own emissions reduction commitments and businesses who are hoping to supply the infrastructure to support EVs.” 

“But this goes not just to how members meet their own targets, but how successfully economy-wide targets are going to be able to be pursued,” he said. 

AIG Calls for Electric Vehicle Tax to be Scrapped

electric vehicle tax

The Victorian government says that the average EV or plug-in hybrid owner would pay around $330 extra each year in the proposed road taxes, while drivers of internal combustion vehicles would pay around $600 in taxes on the fuel purchased. 

Victoria’s Treasurer, Tim Pallas said that “these reforms are about ensuring all motorists pay their fare share to use our roads while we continue to incentivise the use of zero or low-emissions vehicles.” 

“Introducing a road usage charge now, before take-up increase substantially, ensures that everyone pays a fair and sustainable charge for the use and the wear and tear on our road network and that means safer roads.” 

CEO of the Electric Vehicle Council, Behyad Jafari has countered this point with an interview with The Guardian stating that electric vehicle owners, who have already paid a premium for their vehicle, have also paid GST, stamp duty and registration fees. 

The Electric Vehicle Council says that, according to its research, owners of electric vehicles provide a $8,763 boost to the Australian economy over ten-years; including $1,370 of money for the government 

“An electric vehicle costs, on average, more than a petrol and diesel one… so the taxes that you pay apply to that upfront cost, which means that electric vehicles are already relatively paying much more in tax than a petrol vehicle.” 

“The Victorian government is unique right around the world in saying that we actually want to add a new tax on to electric vehicles, whereas what we have in most of the world is places saying we actually want to exempt electric vehicles from taxes, because at this very stage, we want to help people choose to buy one, as opposed to buying a very heavily polluting petrol or diesel car.” 

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