A full bench of the High Court has set aside three days this week to hear a case in which two vehicle owners are fighting the constitutional right of the Victorian government to levy road user charges against electric vehicle owners.
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The case fires up an ongoing debate which has simmered for years and is now on the boil constantly as electric vehicle sales have accelerated. The ACT has the highest rate of new electric vehicle sales in the country.
The High Court case centres on the Victorian government's controversial decision in 2021 - under the so-called ZLEV Act - to make EV and hydrogen vehicle owners pay 2.6 cents per kilometre as a road user charge.
Owners of plug-in hybrid electric vehicles (PHEV) - who can tap into both on-battery power and operate their vehicle on pump fuel - pay 2.1 cents per kilometre.
One of the plaintiffs in this case is a PHEV owner, the other an EV owner.
The Victorian tax calculation relies on owners uploading a digital image of their odometer as part of the vehicle registration process. If a drivers fails to report their reading, they will automatically be billed them for 13,500km a year, or up to $351. And their registration could also be suspended.
Most states and territories, including the ACT, have rejected the road user tax on EVs - at least for the time being - believing it to be politically unpalatable and counter-productive to growing their own EV sales and thereby "greening" their emissions-heavy transport sectors.
But the Victorian government has pressed ahead regardless, claiming it as unfair that EV owners avoid the 42.7 cents per litre fuel excise paid by people who own internal combustion vehicles.
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The complication is that fuel excise is a Commonwealth tax, not a state one. Simple to collect, the Commonwealth fuel excise revenue goes into the general federal revenue pool, which is then doled out to the states and territories.
The two plaintiffs claim that the ZLEV Act is invalid and discriminatory in that it imposes a "duty of excise" within the meaning of Section 90 of the Constitution and is therefore beyond the legal powers of the Victorian parliament.
The validity of states and territories to impose specific forms of taxes has faced multiple legal challenges down through the years and the road user tax is one which is certain to flare up again and again.
Road user tax reform is not a Commonwealth priority but it is an emerging issue. The issue at a federal level is devising a formula which is equitable to both the millions of internal combustion owners, and the zero emission vehicle owners.
Vehicle-related charges such as registration and third party are the purview of the states, and every jurisdiction imposes those charges in a different way, with the ACT switching to an emissions-based registration scheme this year.
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