High Court rules Victoria's EV tax 'unconstitutional'


A High Court ruling that Victoria's controversial Zero and Low Emissions Vehicle (ZLEV) road user charge was "unconstitutional" is seen as a major win for those calling for a national approach to how zero emissions vehicles contribute to road funding.

The High Court decision to rule against the 2.8 cents per kilometre tax for electric vehicles is expected to see other states abandon plans to introduce a road user charge on EVs and instead leave the revenue collection to the Federal Government.

Describing the ruling as a "landmark constitutional decision" against a tax that many considered a disincentive to purchasing an EV, David Hertzberg from Equity Generation Lawyers said: "Victoria's electric vehicle tax is invalid".

victoria's ev tax found unconstitutional

"It also sets a precedent which will likely prevent other States from implementing similar legislation," he said.

Why did Victoria impose a new tax on EVs?

Many states have announced plans to investigate or implement a road user charge for EVs, but Victoria was the first to introduce one.

It currently affects 21,528 owners of EVs and plug-in hybrid electric vehicles (PHEVs), the latter able to run on electricity or petrol.

The ZLEV road user charge was set up to ensure EV drivers contribute to the upkeep of roads.

It amounts to about $400 per year for the average electric car driver and is additional revenue to Victoria that it previously didn't have.

That's because the federal fuel excise - currently 48.8 cents per litre of petrol or diesel - is collected by the Federal Government and has done the heavy lifting with raising revenue for maintaining roads. A car using 10 litres of fuel per 100km would pay about $700 per year.

Why was the road user charge ruled unconstitutional?

A road user charge has been discussed for decades, but the High Court ruling found it was invalid when metered by the states.

The High Court's ruling came down to the tax being considered an excise.

"The ZLEV charge is, as its name suggests, a tax on ZLEVs. For that reason, it is a duty of excise," the court said.

The court also stated that any such excise would have to be implemented nationally rather than by the states or territories.

The ruling said: "Any tax on ZLEVs or any other goods ... can be imposed only by uniform national legislation."

In other words, should a road user charge form part of Australia's taxation system - something that has been discussed for decades - then it would need to be done by the Federal Government.

Will Victorian EV owners get a refund?

The High Court ruling has quickly sent social media into a buzz about whether Victorian EV owners who've paid the tax will be eligible for a refund.

The Victorian Government is still saying owners of ZLEVs need to pay the road user charge while it reviews the High Court decision.

"Motorists who are due to renew their zero and low emission vehicle (ZLEV) registration should continue to do so," said a VicRoads statement.

For now, it's unclear whether there will be refunds, although the fact it has been ruled as unconstitutional seems to mount a solid case.

On its website, VicRoads says it is "working through next steps" and that it will "work to implement the findings of the High Court".

While the EV tax was rushed in, it appears owners will have to wait to get any money back: "Given the large number of impacted customers it will take some time to work through each of their individual circumstances."

What next for road user charges in Australia?

Earlier in 2023 South Australia repealed legislation to introduce a road user charge in 2027, arguing it would be "putting barriers in place that dissuade" the uptake of EVs.

Western Australia and NSW, however, are still planning a similar road user charge by 2027, something that could change following this ruling.

The head of the Electric Vehicle Council, Behyad Jafari, was one of many calling for a national 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."

One option is to eliminate the fuel excise and instead implement a road user charge for all vehicles, not just EVs.

The Federal Government has promised to announce its CO2 emissions regulations for new vehicles by the end of 2023 although there's no indication whether a road user charge will form part of the proposed legislation.

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Toby Hagon is one of Australia's most respected motoring writers. A regular contributor to News Corp, Wheels magazine, Qantas magazine and 4x4 Australia, he also features as a motoring expert on ABC Radio and is editor of EVcentral.com.au.
Hugh MacGregor
October 21, 2023 5.39pm

I have have an EV. I pay more tax in Victoria than if my car was powered by a petrol engine. This tax was yet another not thought out knee jerk reaction which is very common in Australia. And where does this propaganda another common problem in Australia get 10 litres per 100 Kms from, a Sherman tank? My fossil fuel car does 4.5 litres to 100 Kms. It's a VW Eos. My EV is a Mitsubishi i-miev. It weighs 1080kgs. There are EVs weighing more than three times that. I paid the same tax in Victoria as a 3 or 4 times heavier EV. When is this country going to start thinking instead of believing absolute rubbish and propaganda. And when will they stop raping their fragile environment. This is another well deserved slap in the face with a dead wet fish. THEY NEED MANY MORE THAN THERE ARE FISH IN THE OCEAN.