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Coalition ponders a Tesla tax on electric vehicles

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One of the few (albeit unintentional) incentives for the early adoption of electric vehicles in Australia – avoiding the exorbitant cost of petrol – looks set to be at least partially removed, in a federal government review of how revenue is raised for Australia’s roads.

In an interview with ABC News on Thursday morning, federal minister for major projects, Paul Fletcher, flagged the federal government’s plan to reform the way Australian drivers are taxed to pay for the upkeep and development of roads, with a particular view to scrapping the $10 billion annual fuel excise.

ev-plug

The idea – and it’s a long-term view; part of the federal government’s 15-year infrastructure plan announced on Thursday – is to dump the fuel tax and instead charge motorists a “road user” fee, based on how far they travel and the level of congestion on their routes.

But the interesting part is Fletcher’s reasoning for this: One of the problems with the fuel tax, he argues, is that it just isn’t fair to all motorists.

“If you’re driving a 10-year-old Commodore, you’re paying through the fuel excise system the equivalent of 4.5c a kilometre, if you’re driving a Prius it’s about 1.5c a kilometre, if you’re driving a completely electric Tesla you’re not paying anything.

“So one of the issues is fairness,” he said.

It’s an interesting perspective, in light of the fact that Australia has one of the slowest growing electric vehicle markets in OECD – a state of play owing almost entirely to the distinct lack of any sort of national policy framework to support or incentivise the uptake of electric vehicles.

It is also a rather dishonest claim. The real motivation for the government scrapping the fuel excise is its need to maintain revenue to build and fix roads as vehicles become more fuel efficient and eventually move away from petrol and diesel altogether.

Which brings us back to the lack of policies supporting the above transition, and the resulting snail’s pace of EV uptake in Australia, compared to other countries like Norway, which offer tax exemptions for EVs precisely because they don’t use petrol – helping to make it the top EV market per capita.

Australia’s EV policy vacuum, meanwhile, was addressed in April by ClimateWorks, who convened an industry-led appeal to the federal government to, among other things, factor in the value of the broader benefits of EVs to human health, air quality, fuel security, energy productivity and electricity supply in any future regulatory reform.

“The lack of a national policy framework in Australia has led to limited overall support and incentives in comparison to our global peers, which has contributed to our poor ranking among major OECD countries for the energy efficiency of our transport sector,” the report said.

“While there is recognition of the short term nature of some recommendations, they are derived from global ‘best practice’ vehicle electrification strategies aimed at near term uptake and support, to ensure Australia is ready for enhanced uptake of EVs in order to meet our climate, energy productivity and air quality goals.”  

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  • Stefan Jarnason

    What about pollution costs? Exactly how much does the fuel excise contribute to the massive health costs?

    • DevMac

      It doesn’t, they don’t give a f___ about health issues. Health issues don’t stop trucks from delivering goods that keep our economy running. Health issues are too intangible, and therefore complex, to consider by short-sighted Australian politicians.

      • John Saint-Smith

        It is well known that people who live in the leafy Liberal suburbs don’t experience anywhere near the level of air pollution from major motorways that are endured by the working classes. Why would you tax the rich for polluting the poor?
        Unfortunately, petroleum fuels emit CO2 as well as coal and gas, so they all contribute to the climate change problem that Turnbull used to be concerned about.

      • Andrew Roydhouse

        DevMac you are missing the point.

        AND this is the point that ALL political parties deliberately WANT you to miss.

        The decisions made and platforms followed by all major political parties have nothing to do with what is in the best interests of the local community impacted nor the wider community.

        The decisions are made purely to satisfy the demands of those who are funding the snouts-in-trough brigade.

        In-depth research I conducted (as a funds manager) in the late 90s through to the early 2000s provided a startling (for even cynical me) result.

        Looking at all ‘declared’ (yes that may well be less than 15% of all donations taken) political donations Australia-wide, tracing who owned seemingly obscure companies/organisations making donations, to all levels of Govt (local, state and federal) – resulted in the following:

        X Year after year Five of the top Ten donors to the ALP and Lib/NP were the same, although as the control of local, state and federal Govt changed – curiously enough so did the break-up of the donations.

        X Some donations and the following Govt decisions have been widely reported and investigated by the media or bloggers. Investigations at the Federal level do not appear to have occurred in virtually a single case however. Odd how both sides of politics see NO NEED for a federal version of the ICAC isn’t it.

        X The slightly publicised allegedly illegal acceptance of donations by the NSW Liberal Party that were subsequently sent to the ACT and returned as revealed in the ICAC project SPICER investigation – are to this day still un-identified as the NSW Liberal Party have refused to cooperate.

        X Allegedly, according to the ICAC transcripts and an inadvertent declaration by an allegedly no longer working for the ACT Liberal party worker – one of those donations came from one of the Top 5 donors I identified in my earlier research.

        X In May 2016 it was widely reported that the NSW Electoral Commission served a letter of demand on the NSW Liberal Party and amongst others Senator Sinodinos – demanding the names of the donors be revealed. The immediate penalty for not complying was the withholding of over $4.4m of funds due to the NSW Liberal Party for the votes gained in the 2011 State election. Subsequently Malcolm Turnbull was reported to have lent/given (apparently not yet declared which it is and will not have to until July 2017) allegedly due to the missing $4.4m from their coffers.

        X Under NSW legislation it appears to be a criminal offence not to comply with the State Electoral Laws regarding political donations even if they are legal donations. Not responding to a demand by the NSW Electoral Commission within the permitted time frame also appears to be a criminal offence. Indeed not listing a box of blank paper from a neighbour appears to fall foul of the law in Council elections for an independent.

        X Six months later the NSW Attorney General has not issued a single warrant for anyone to do with this. What party does he belong to?

        X No other political party raised this issue going into the 2016 Federal election, nor since. Why is that?

        Sorry, a rather detailed reply to the possibly real reason decisions are made by the best politicians money can buy. Unfortunately the benefits/costs for the community seem not to be the driver. But I could be wrong…

  • Chris Fraser

    Again the government makes decisions on the basis of what can be taxed, not about improvements to air quality or slowing the growth in emissions.

    • MrMauricio

      …or costing the very significant health impact of emissions from petrol and diesel vehicles-its so pathetic as to be laughable!!!

  • Stan Hlegeris

    Let’s imagine for a moment that we had a government driven by rationality. That government would acknowledge that the cost of road damage done by a vehicle varies approximately in proportion to the fourth power of the weight of that vehicle. (Obviously not exactly, and only over a limited but relevant range of weights.)

    That means a 2-tonne vehicle does about 16 times as much damage as a 1-tonne vehicle, and a 10-tonne vehicle does 10,000 times as much. Rational road use charging would be on the basis of mass^4 x distance.

    This would act powerfully to discourage long-distance heavy vehicle use, and the cost of our goods would reflect the real cost of getting them to us. We’d end up eating more apples in Tasmania and more mangoes in Queensland. We’d see a big increase in rail transport. I’d be OK with all that.

    • Marka

      “in proportion to the fourth power of the weight of that vehicle”

      is that accurate?

      • Stan Hlegeris

        Hi Marka–there are squillions of references for this. Here’s one: http://www.uctc.net/research/briefs/PB-2010-01.pdf. Otherwise just search “road damage fourth power” and take your pick.

        To be more accurate I should have said “axle weight” rather than “vehicle weight.”

        • Andy Saunders

          I suspect it should be more “tyre weight” rather than “axle weight”.

          Given (for trucks) the number of tyres roughly tends to be proportional to the weight, then the appropriate relationship would be closer to a cube than a 4th power, I would havee thought.

          • david_fta

            Actually, the 4th power should remain, since tyre footprint on road does not increase linearly with axle loading. There’d be some correction, sure, but I doubt it’d be enough to take it back from fourth power to third power.

            First guess for the damage function D per mile (assuming all vehicles drive at same speed, a reasonable first approximation) would be something like

            D = k * n * M^4, where n = number of axles, M = axle loading and k is some proportionality factor.

            Each year when you register the vehicle I guess they’d get the Damage charge by multiplying D by the previous year’s mileage.

          • Andy Saunders

            My point was that the number of tyres/axles tends to increase roughly proportionally to the weight (the axle loading stays relatively constant). A 50T B-double has more tyres/axles than a semi, which has more than a van. So a cubic relationship is more accurate.

          • david_fta

            You’ll note that I use M = axle loading rather than W = GVM …
            ie W = n.M ie M = W/n

            I get D ~ nM^4, which would be equivalent to D ~ W^4 / n^3

          • Andy Saunders

            Yep, but the axle loading doesn’t increase with weight, the number of axles does tend to increase with weight.

            Actually, I think we agree (but are talking about slightly different things)

          • david_fta

            I’m setting out a formula that approximates a damage function that might be used to attribute road user charges that explicitly includes the number of axles (look for ‘n’ in the formula).

          • neroden

            Note that toll roads in the US charge by number of axles. So there is precedent for this.

          • Chris Marshalk

            I like your idea of charging a tax based on your driven mileage but that too isn’t fair if you’re poor but have to travel by car 40km to work.

          • Dispassionate

            Why isn’t that fair?
            Why should personal wealth come into how much you pay for a service?

          • david_fta

            Poor people who drive to work generally don’t own semi-trailers, B-doubles or road trains, which will be paying the bulk of any use-based axle loading to the 4th power charge.

            Worth also remembering that most large trucks drive hundreds of thousands of miles per year, whereas most cars – even the ones doing 80 km round trip every working day – don’t generally do more than ~20,000 miles per year.

      • MaxG
    • MaxG

      This would be bad for “business” — why they would not adopt this model! We can’t have user pays system, only a Joe average pays system — as usual; I mean the corporations do not pay tax, why slug them with road use fees. Again, as usual, Profits are privatised and costs publicised. We all aoy for the corporations to stash the cash.

    • DDD

      So by that rule, how much damage would a 10kg bicycle do?

      Or do we need to allow for the 90kg rider so lets say a 100kg bicycle?
      (do cars assume additional weight for their drivers and passengers?)

      • SaladFinger

        The wind and rain would do more damage to the road than 100kg bicycle. Any miniscule damage would be offset by the reduction in health costs associated with lack of exercise and environmental damage as a result of building and maintaining 1-2 ton cars. Commuters should be paid to commute by bicycle.

    • Greg Hudson

      The trouble is there aren’t enough Queenslanders to eat all the mangoes, or enough Tasmanians to eat all the apples. Hence the need to ship them to where they are needed.

  • Miles Harding

    Whoah! not so fast!!
    This has got to get through endless state-federal bickering and several changes of underpants (elections) before anything will happen. There’s plenty of time to have every rational arrrghument debated and thrown out in favor of the most regressive plan imaginable and then some.

    Presently it’s pointless, as there are exactly 0 EVs on the roads (rounded to the nearest part in 1000).

    • Petra Liverani

      True, but it’s still a very annoying, insultingly stupid rationale.

    • Peter Campbell

      Actually, it’s about 3000 rounded to the nearest 1000.
      http://forums.aeva.asn.au/how-many-ev-phev-owners-and-drivers-riders_topic5035.html

    • Miles Harding

      Let me try that again.

      EVs number about 3000 of the 18.1million registered vehicles, or one part in 6000 – it’s little wonder I almost never see another EV on the road. When I do see one, it’s most likely to be a Tesla 🙂

      • Peter Campbell

        I often see another EV while I am out driving in my EV, an iMiEV or Leaf, occasionally a PHEV Outlander, that’s the sort of neighbourhood I’m in. Generally not a Tesla, though. I’m not in that sort of neighbourhood.

  • MaxG

    Why am I not surprised?! What a bunch of morons.
    Telsa won’t build a factory in Australia; “why” I (do not) wonder. :))

    • DevMac

      “What a bunch of morons”
      Precisely my first reaction.

  • Ursula Theinert

    Most modern and ‘innovative’ countries a providing financial incentives to EV owners…… but alas, the Tea Party reins supreme in The Land of Oz!

  • Ian Smith

    Bring it on! As long as the formula takes into account the cost to society as a whole, I’d be happy to participate. That would mean that every bicycle rider in the country would get PAID to ride everywhere on a free bike! Less air pollution, lower hospital costs, much lower road costs, greater productivity, lower absenteeism, more money being spent in our community businesses and less congestion for heavy vehicles. A win in most facets of our lives.

    • Rod

      I wonder if I’ll get charged for putting an electric motor on my bike.

  • Dave

    And by having a “fuel tax” it perfectly reflects road user contributions.

    Light weight cars do less damage to the road, and also use less fuel, so the amount of fuel tax that they pay is proportional to the damage done.

    A heavy truck does a lot of damage, but they use a $hit load of fuel, and therefore pay a lot in tax.

    It is a simple system, maybe not perfect, but pretty close and VERY easy to administer and account for.

    The only thing that it does not account for is EV’s. Not really a problem because there are so few of them on the road ATM and the #libtards are doing all they can to discourage their uptake.

    This “free” road use should be just ONE of the incentives used to de-carbonise our transport sector.

    • Malcolm M

      Fuel use is proportional to the first power of the mass, not 4th power, so there is still a massive cross-subsidy from light vehicles to heavy vehicles.

      There is also a huge cross-subsidy among the tiers of government. The Federal government collects the fuel tax, and returns some of it to local government, some to declared interstate roads, but virtually none to other State highways. In SW Victoria there is a huge unfunded liability for foundation rebuilds on the State highways leading to Portland, which were built in an era when most of the heavy lifting was done by the rail network.

  • lin

    This government is determined to keep Australia burning fossil fuels, regardless of their impact on our health and climate. They will do anything to keep our dollars flowing into the pockets of their donors/masters. Worst government ever.

    • david_fta

      They’ll be remembered as the biggest bunch of traitors ever.

      When David Leyonhjelm gets Adler A-110’s allowed into the country, can we have capital punishment reinstated for treason?

      • Brunel

        What does the law say about making such guns in AUS?

        • david_fta

          wot, making guns? I suppose it’d be manufacturing industry, not sure if we’ve got the skills for that.

  • Robin_Harrison

    The fossil fools of Canberra are getting increasingly desperate.

    • Mike Dill

      Actually, the people who live there are a lot brighter than the people who show up and attempt to make policy.

      • Robin_Harrison

        Everybody is brighter than them. I meant no offence to the people of Canberra and it’s impossible to insult the fossil fools. Money and ideology make both sides impervious to logic, reason, facts and truth.

  • Peter Campbell

    Perhaps they realised that a fuel excise is a carbon tax.

    • Carl Raymond S

      Lol. Australia, you’re standing in it. I so want to be proud of this country, but our politicians make it so damn hard – always vying for last place.

      • Gyrogordini

        Unfortunately (for half of us -1), the other half (+1) keep voting this bunch of idiots in. We’re getting and paying for something that many of us don’t want.

        • Coley

          This Murdoch fella, he’s originally Australian?

          • Carl Raymond S

            Yeah, sorry. At the time of the Iraq war protests, when 65% of Australians wanted no involvement, all 70 of his newspapers were backing war. Without Murdoch backing Howard all the way, there’s a good chance we would have stayed out of it, like NZ.
            News limited has also been anti climate change action. When the empire is handed to his saner children, that hopefully changes. What a man. What a legacy.

  • trackdaze

    Nevermind that the majority of our fuel is a drag on the current account.

    • lin

      Not to mention that because it is all imported by ship and our reserves are less than 1 month, it is also a serious security risk.

      • Peter Campbell

        I really would enjoy driving about smugly in my 8 year old EV (or my newer one) if we ever have a petrol shortage.

  • Brian Tehan

    The most amazing statement in there is the comparison between a Prius and a gas guzzling Commodore. The Prius runs on petrol, it’s just more efficient. So, he’s unhappy that fuel efficient cars are “subsidising” gas guzzlers! Is there anywhere else in the world where you’d hear this from a government. Most governments are happy to encourage fuel efficiency and less emissions.
    In any case, the fuel levy is just a tax added into general revenue. It’s not the source of income for roads.

  • Gyrogordini

    That would be right: most OECD countries encourage Electric Vehicle take up – not Straya. Apart from a tiny reduction in the Luxury Car Tax, and in enlightened jurisdictions like the ACT, EV’s are just “more cars”. “Smart and innovative country”? No way.

  • Cooma Doug

    I had this discussion 8 years ago with some IT nerds and politicians. We were at a presentation of innovative applications.
    My contribution was an idea for managing roads for conjestion and money for maintenance.

    There would be a toll on every road. But tolls are dynamic depending on the conjestion. Some tolls would be negative at times in order to encourage specific responses to manage conjestion.

    The idea is eventually based on car computer and a system that moniters car movement on all roads. This system would manage car density as the power system manages grid loading on the power system by adjusting toll nodes and so control traffic density.

    So you get in your car and you state your destination as we now do with google maps and other products today. The response will be various routes and cost of journey. You make your choice. Some routes might even result in a credit and you may be influenced to change your route during the journey also due to accidents on roads etc.
    Your departure time could also be influenced by this process. Also in time the system would evolve in ways we could only imagine through experience.
    Back 8 years ago the idea was appreciated but now, when most people have seen the functions and innovations of google maps and such products, it seems very possible. Initially there would be other ways of communicating toll variations to drivers with older cars.

    Eventually the travel plan of all vehicles would be influenced by this process over both long and short term. As we move to auto pilot cars and better use of car numbers where each car has a higer passenger number, the toll could be a major influence on many aspects of travel.
    Eg divide tolls by the number of passengers in the vehicle.

    • Dispassionate

      Sounds like it would be easy, cheap to put in and run…

  • PeterInOz

    It might not be well known, but they have already reintroduced indexation on fuel excise, so it is now going up by the rate of inflation. If they were smart, they should tax fuel out of existence, thereby creating a relative and natural incentive to migrate to EVs. At the same time they should just incrementally increase the GST to cover the eventual shortfall in fuel excise. Do so would not only provide an incentive but it would favour early EV adopters as they would be buying their cars at a lower initial price at the start of the transition. Distribute the GST and allow State Governments do their thing with roads, and if not, then let the ballot box sort out who then runs the show. Pretty simple actually .. and not frigging convoluted as they are suggesting / planning.

    • Dispassionate

      I really don’t understand this love affair most people have with GST!!??
      It is a regressive tax that favours above average income earners and hits low and no wage earners the hardest…

      • PeterInOz

        I appreciate the comment but disagree as the application of GST here in Australia does not apply to food and other essential items. In addition, low income / no income individuals do receive discounts and rebates for other essential items such as rates, bus fares, electricity, water and the like. The current rate of Fuel Excise is extremely regressive upon low income earners, particularly if they have to travel any distance, and so a small increase in GST braodly applied as an offset would be far better for them and the community as a whole I feel.

        • Dispassionate

          I agree that people on very low income and no income receive discounts and rebates and some food is GST free (unprocessed). However, the people earning just above the low/no income rates but still only up to the average wage (which I believe is the majority of the Australian workers although I am just guessing and will look this up later to confirm) do not receive any discounts, and the food purchased in the main is processed foods (not GST free, ironically processed foods inc of GST are cheaper than fresh food with no GST!?)) so increasing GST would be just moving from one regressive tax to the next, except it would be even more difficult to avoid (i.e. car pooling/obtaining work closer to home/moving closer to work etc).
          I think some people (probably not you Peter) think GST is the answer to everything. I hear on the radio all the time people saying raise the GST and all our funding problems will be solved! Well I guess congrats has to go to the Howard gov on the sell job it did with GST as it would seem to be the only tax that people are happy to pay more of!
          Interesting when the same government then a few years later argue against a “Tax on everything” (carbon tax) *shrugs*

  • Hendo

    One of the incentives for buying an EV is the running cost. Taxing EV’s could effectively remove that incentive and delay the widespread adoption of electric vehicles. Further, that means a continuance of the fossil fuel use – in direct contradiction of sensible (essential) climate policy.

    I don’t fully accept the “fairness argument” posed by Fletcher. If you go to an EV it is likely that there is an environmental component of your decision to buy EV. And you pay more for that feature in the way of capital cost and purchase taxes. You could argue that that cost is a contribution to clean air and should be credited with a number of road kilometres. That would be fair enough.

    That said, how is government supposed to fund roads without some kind of revenue stream? Same question for the touted driverless cars. One of the benefits (of driveless cars) is a very large drop in the number of vehicles needed. So again the question of road funding can be raised, if not for new roads then the upkeep of existing roads.

  • Chris Marshalk

    ANOTHER TAX. What about Taxing Corporate Australia in paying their fair share of Taxes?? Billions upon Billions in lost tax revenue. Yet, taxing a non polluting green vehicle is nothing but another tax grab.

  • DJR96

    Yes the whole fee structure of vehicle registration needs an overhaul and is being looked at, including fuel excise, congestion charges, per kilometre, CTP insurance. But there is no way there will not be some form of tax/excise on fuel. That will always be part of the mix. It might be a bit different to what we have now, but there will be something.

  • BeyondZeroEmissions

    It seems a very roundabout way of acknowledging the future of transport is electric, which in some vague sense seems to be what Fletcher is not exactly not-saying. Climateworks absolutely spot on, our only comment is our usual comment ie that the shift can be faster, it can be cheaper, and that having state and city targets for EVs powered by 100% renewables is a necessary and cost-effective pairing which is already possible and already affordable – we can do it now.

  • Peter Campbell

    In New Zealand:
    https://www.beehive.govt.nz/release/govt-driving-switch-electric-vehicles
    -A target of doubling the number of electric vehicles in New Zealand every year to reach approximately 64,000 by 2021.
    -Extending the Road User Charges exemption on light electric vehicles until they make up two percent of the light vehicle fleet.
    -A new Road User Charges exemption for heavy electric vehicles until they make up two percent of the heavy vehicle fleet.
    -Work across Government and private sector to investigate the bulk purchase of electric vehicles
    Government agencies coordinating activities to support the development and roll-out of public charging infrastructure including providing information and guidance.
    -$1 million annually for a nation-wide electric vehicle information and promotion campaign over five years.
    -A contestable fund of up to $6 million per year to encourage and support innovative low emission vehicle projects.
    -Allowing electric vehicles in bus lanes and high-occupancy vehicle lanes on the State Highway network and local roads.
    -Review of tax depreciation rates and the method for calculating fringe benefit tax to ensure electric vehicles are not being unfairly disadvantaged.
    -Establishing an electric vehicles leadership group across business, local and central government.

  • onesecond

    I am from Germany and I use public transport, but this makes me really angry. Can Australia become any more a pain in the back while others try to save this planet?

  • Rob Black

    So ok they introduce this PURE BS tax. Surely that means toll roads will no longer exsist?

  • DogzOwn

    How about hustling the Minister why he prefers subsidising transport run on “their”imported, dirty, damaging petrol/diesel with foreign debt when so much of it could run on “our” clean renewable energy.

    About trucks, average age in Oz is 13 years, many from before emission regs, when even USA leaves us for dead at 6.7years. Obviously newer trucks, as well as cars are much cleaner and more economical. Roll on EV city trucks and electric rail for long haul.