A leading economist has warned that Australian motorists could be taxed for every kilometer they drive because phasing out petrol cars would put a massive hole in the budget.
A sweeping switch from petrol-powered cars to electric vehicles is planned as part of Labor’s plan to cut carbon emissions by 43 per cent by 2030, which passed both chambers of Parliament in September.
However, the federal government’s National Electric Vehicle Strategy Discussion Paper recognizes that such a shift will result in a massive drop in revenue from the existing fuel tax, which is nominally used to fund the maintenance of the nation’s roads.
“They need to find an alternative source of income,” Brian Fisher, managing director of BAEconomics, told Daily Mail Australia.
“I spontaneously think of taxes based on the distance travelled.”
Australian motorists could face tolls for every kilometer they travel as petrol cars are phased out (pictured is the WestConnex M4 tunnel at Haberfield).
The government’s discussion paper indicated that the country might be heading in that direction.
“Planning is…necessary as future fuel tax revenues will decrease due to reduced consumption of petrol and diesel,” it said.
Queensland Nationals Senator Matt Canavan (pictured with his wife Andrea), a former economist, said he had privacy concerns if a distance toll were imposed on private cars
“While these proceeds are not currently earmarked for road spending, they are an important source of funding.
“In the longer term, Australia will need a more sustainable and fairer way to pay for roads.”
Excise taxes on gasoline and diesel fuel brought in $19.2 billion in revenue in fiscal 2021-22, Treasury Department papers show.
The six-month excise halving to 22.1 cents a liter that ended in late September cost the budget an estimated $3 billion in revenue.
Victoria has required electric vehicle owners to report their mileage since last year, becoming the first state to impose a distance toll on private cars.
dr Fisher, a former Commonwealth civil service executive, said the model could be rolled out nationwide to offset future declines in fuel consumption taxes.
“One way or another, someone has to make up the difference, or you have to cut spending,” he said.
“Certainly the current government has not shown any enthusiasm for cutting government spending, so I suppose there needs to be an equalization tax.
“Those who want to keep tax revenues where they are now have to find a new source of revenue, and if one thinks that road pricing is the way to do it, then the obvious way to increase revenue is to put some kind of tax on distance travelled .’
The federal government’s National Electric Vehicle Strategy discussion paper, released this week, found that fewer petrol and diesel cars on Australian roads would mean less excise tax revenue (pictured is the new Toyota LandCruiser 300 series).
The consultation paper from the Federal Ministry for Climate Change, Energy and Environment examined the idea of extending the distance toll, which already applies to petrol or diesel trucks, to electric trucks.
Best Selling Chinese Electric Cars
TESLA MODEL 3: 2,380 in August and 7,037 in 2022 so far
TESLA MODEL Y: 1,017 sold in August and 1,017 in 2022 so far
PADDING 2: 38 in August and 694 in 2022 so far
VOLVO XC40: So far three in August and 525 in 2022
BMW IX3: 58 in August and 349 in 2022 so far
MG ZS EV: None so far in August and 138 in 2022
VOLVO C40: So far two in August and two in 2022
Source: Federal Chamber of the Automotive Industry
“We already have a system for setting national uniform charges to cover the cost of road use associated with heavy vehicles,” it said.
“This system has been around since 1996.”
This user-pays principle could apply to future electric trucks, as heavy vehicles cause more road wear, but the paper did not specifically advocate extending this fee to electric cars.
“Part of this reform is exploring more direct charging options for heavy vehicles, including heavy-duty electric vehicles,” the newspaper said.
Queensland Nationals Senator Matt Canavan, a former economist, said he had privacy concerns if a removal fee were imposed on private cars.
“Trucks are different because they are commercial vehicles and personal vehicles – there is a privacy issue,” he told Daily Mail Australia.
“I oppose this type of law mainly because I am concerned about the privacy concerns of governments who know where everyone is going and traveling and how that would be enforced.”
More than 95 per cent of cars sold in Australia have either petrol or diesel engines, including hybrids.
Australian motorists still overwhelmingly prefer Utes, with the Toyota HiLux and Ford Ranger being the two best sellers last month.
The majority of cars sold in Australia are SUVs, few of which are electric versions as buyers queue for a Toyota LandCruiser, Toyota RAV4 or Mazda CX-5.
All-electric cars accounted for 4.4 percent of all 95,256 vehicles sold in August, data from the Federal Chamber of Automobile Industry showed (pictured a Tesla being charged in California).
All-electric cars accounted for 4.4 percent of all 95,256 vehicles sold in August, data from the Federal Chamber of Automobile Industry showed.
Australia’s best selling cars in August
1. TOYOTA HILUX: 6,214 sales (made in Thailand)
2. FORD RANGER: 4,497 sales (made in Thailand)
3. TOYOTA RAV4: 2,482 sales (made in Japan)
4. TESLA MODEL 3: 2,380 sales (made in China)
5. TOYOTA OFF-ROAD: 2,379 sales (made in Japan)
6. MAZDA CX-5: 2,325 sales (made in Japan)
7. TOYOTA COROLLA: 2,115 sales (made in Japan and Thailand)
8th. MITSUBISHI TRITON: 2,087 sales (made in Thailand)
9. HYUNDAI I30: 1,975 sales (made in South Korea)
10 ISUZU UTE D-MAX: 1,928 sales (made in Thailand)
Source: Federal Chamber of the Automotive Industry
In August, 3,498 Chinese-made electric cars were sold in Australia, with Tesla, Polestar, Volvo and BMW models accounting for 82.6 percent of the 4,235 electric cars ordered.
The Shanghai-made Tesla Model 3 was Australia’s fourth most popular car with 2,380 orders, beating the four-wheel drive Toyota LandCruiser.
From January to August, electric cars had a two percent lower market share with 14,524 vehicles sold out of a total of 717,575 new vehicles ordered.
But sales of Chinese-made EVs totaled 9,762, accounting for 67.2 percent of Australia’s EV market.
The Tesla Model 3 is Australia’s most popular electric car with a starting price of $63,900.
It’s been sourced from China instead of the United States since last year, with 7,037 examples sold so far in 2022.
The Tesla Model Y – priced at $72,300 and also made in China – found 1,017 new owners in its first month last month when it went on sale in Australia.
Elon Musk’s electric car brand also makes the Model S and Model X in Fremont, California for the Australian market, but so far this year the only Teslas sold locally have been made in China.
China’s MG ZS EV is Australia’s cheapest all-electric car, starting at $44,990, but none have been sold in the last month.
Climate Change Secretary Chris Bowen said transport is Australia’s second largest source of national emissions, noting that “increasing EV adoption will be critical to Australia reaching net zero by 2050”.
“This is a real consultation to inform the right political attitudes so we can see more affordable electric vehicles on our roads,” he said.