Vic introduces Aust-first electric car tax

Victoria's proposed electric vehicle tax is expected to raise $30 million over four years.
Victoria's proposed electric vehicle tax is expected to raise $30 million over four years.

The Victorian government is set to become the first in the country to introduce a tax on electric vehicles.

Legislation introduced to state parliament on Wednesday could mean electric vehicle drivers pay 2.5 cents for every kilometre travelled from July 1.

A 2.0 cent per kilometre charge will also apply to plug-in hybrid-electric vehicles.

The tax is expected to raise $30 million over four years and is forecast to cost the average electric vehicle owner between $260 and $300 annually.

Treasurer Tim Pallas describes the tax as "modest", about half the rate of what other vehicle owners pay through the fuel excise.

He says it will ensure electric vehicle drivers make a fair contribution to the cost of building and maintaining the state's road network.

"Everybody who uses a road should pay their fair share to maintain them," Mr Pallas told reporters.

Less than one per cent of Australian vehicles are electric but Mr Pallas anticipates uptake will grow as they reach price parity with petrol cars by 2025.

"We'll get to a point where essentially there'll be no revenue capacity for the state to manage the use and maintenance of our roads," he said.

"(That) ultimately leads to a less enjoyable experience using our roads but perhaps more worryingly, it means that our roads will become less safe."

The government is also investing $45 million over the next three years to support the uptake of zero and low emission vehicles, Mr Pallas said.

The tax is all but guaranteed to pass the lower house, where the Labor government holds a commanding majority.

But the government faces a fight in the upper house, where without the support of the opposition, it requires the backing of three of the 11 crossbenchers to pass legislation.

Victorian Greens spokesman for transport Sam Hibbins said the party would not support the tax and he implored other crossbenchers to join them.

"The government needs to introduce policies to subsidise electric vehicles and make them more affordable. That's what's happening all around the world," he said.

"If this bill was to pass, Victoria would become the only government in the world that's making EVs more expensive, not more affordable."

Opposition Leader Michael O'Brien said it was the Labor government's 30th new or increased tax since coming into government.

"This government is all talk when it comes to the environment and climate change. When push comes to shove, they prefer a new tax to encouraging people to take up low-emission vehicles," he said.

South Australia was the first state to announce its intention to introduce a user charge on electric vehicles but put the plans on hold until July 1, 2022.

The NSW treasurer is also expected to take a proposal to state cabinet later this year.

Australian Associated Press