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Electric Vehicle Taxes – Putting the cart before the horse

"The new taxes on electric vehicle usage that are being developed in several States, and are now before the Victorian Parliament, are effectively putting the cart before the horse and should not be implemented until clean vehicles are better established and the taxes are better designed," Innes Willox, Chief Executive of national employer association Ai Group said today.

"Road infrastructure needs to be paid for and it will be important in the long term to maintain the tax base as batteries and fuel cells replace petrol tanks in Australia's vehicle fleet. But Australia is currently well behind our peers in that transition. Our slow uptake of clean vehicles is holding back national progress towards emissions targets – and increasing the pressure on every other part of the economy to deliver cuts.

"Now is the time to be helping businesses and individuals access the cleaner vehicles that meet their needs and advance our shared net zero emissions goals. All sides of politics have the opportunity to develop coherent, and preferably nationally coordinated, incentives that are consistent with overall plans for achieving a net zero emissions economy by 2050.

"Unfortunately the most advanced EV tax proposal, Victoria's tax proposed to start on 1 July this year, looks like a major disincentive that would undermine any other supportive policies. Victoria will soon set medium-term emissions targets, and they should be as high as the State can achieve without leaving vulnerable businesses, communities, workers and households behind. Holding back transport transition will make it harder to achieve those targets. The problem is not just the rate, but the red tape and paperwork involved in clunky new reporting arrangements.

"Today we have a uniform national fuel excise system that is – for drivers, at least – very simple. Pricing road use is a complex reform with large potential benefits through more efficient use of our transport infrastructure. But an inconsistent patchwork of kludged-together taxes doesn't bring those benefits any closer.

"Victoria and the rest of the States should slam the brakes on these taxes and spend the next several years working together with the Commonwealth on a solution that is roadworthy. That road pricing work should prioritise national consistency; ease of use; and effective incentives both for efficient road use and emissions reduction.

"It is sensible to signal that drivers will continue to contribute to the cost of the roads they use in the clean car future that we can all see coming. Actually implementing those taxes should wait until that transition is firmly established," Mr Willox said.

Media enquiries: Tony Melville – 0419 190 347