The future of the Victoria state road tax, labelled by the EV industry and its supporters as ‘the worst electric vehicle policy in the world”, goes to the High Court of Australia in Canberra this week in what could be a landmark case for the industry.
The case being brought by Victorian EV owners Chris Vanderstock and Kath Davies and challenges the constitutional validity of the Victorian government’s “Zero and Low Emission Vehicle Distance-based Charge” Act (ZLEV).
Introduced in July 2021, the ZLEV (better known as “The EV Tax”) is a 2.6c charge for every kilometre driven by EVs inside or outside the state of Victoria. It also applies to plug in hybrids, although at a different rate.
Following the initial filing in September 2021, Vanderstock told The Driven: “It’s the worst tax in the world,”
“It’s poorly timed and poorly implemented. Instead of taxing clean technologies, the Victorian Government should be concentrating on getting dirty cars off the road.” he said at the time.
Plaintiff says Victoria’s EV tax is unconstitutional
Equity Generation Lawyers, who are representing Vanderstock and Davies, argue that the State of Victoria lacks the constitutional authority to impose such a charge. The basis of their claim is section 90 of the Commonwealth Constitution, which reserves the exclusive power to levy duties of excise for the Commonwealth.
In what could turn out to be a landmark case, Commonwealth Attorney-General Mark Dreyfus intervened on July 8, 2022 to support the two Victorian EV drivers.
However, the Attorneys-General of South Australia, Western Australia, Queensland, New South Wales, Tasmania, the Northern Territory, and the Australian Capital Territory have intervened in support of the State of Victoria’s position, which suggests the belief that this is about who gets to pocket tax revenues rather than how to hit or regulate EVs.
Victorian and South Australian governments poles apart on EV tax
South Australia’s position is particularly interesting after the South Australian Labor Party went to last year’s election promising to scrap SA’s EV tax. A promise they delivered when “The Repeal Bill” passed through the SA parliament just last week.
In a statement regarding the passing of repeal bill, the South Australian Labor government said that the former Treasurer had “spruiked the Liberal levy as a substitute for federal fuel excise, but it was rather a stealth tax – with a hidden cost for the environment.”
South Australian Minister for Transport Tom Koutsantonis went further saying: “This backwards-thinking tax was another betrayal of the Liberals’ low-taxing rhetoric, as well as a betrayal of the pursuit of Clean Energy solutions.”
“South Australians want to see their State Government incentivising the take-up of electric vehicles, not slugging users with extra costs.” Koutsantonis said.
This stance puts the SA government not only in conflict with their State Labor colleagues in Victoria, but but also the position held by SA’s own Attorney-General.
Questions over division of power between Commonwealth and the States
The stakes are huge as not only does the Victorian EV tax run counter to the Federal government’s strategy to promote the uptake of electric vehicles, if overturned could lead to other states copying Victoria’s policy in a cash-grab that would financially penalise EV owners right when we should be incentivising them.
Senior Associate at Equity Generation Lawyers David Hertzberg, is representing the EV drivers at the High Court this week.
In a statement Mr Hertzberg said: “This case will have ramifications for the division of power between the Commonwealth and the States.
“The Commonwealth, which is currently designing a national electric vehicle strategy, has intervened in support of our clients. All other States and Territories have intervened against us.”
Hertzberg went on to say “But, for our clients, this case is about challenging a tax that will discourage everyday Victorians from switching to lower emissions vehicles.”
The High Court case will be heard over three days this week from the 14th to the 16th of February.
Daniel Bleakley is a clean technology researcher and advocate with a background in engineering and business. He has a strong interest in electric vehicles, renewable energy, manufacturing and public policy.