State electric vehicle tax fuels High Court challenge

Victoria’s new tax on electric vehicles is set for a High Court challenge with two Melbourne drivers arguing the levy is unconstitutional, prompting fresh calls to scrap South Australia’s own EV tax plan.

The Victorian Government introduced a levy of up to 2.5 cents per kilometre for electric vehicle users in July this year.

But electric car owners Chris Vanderstock and Kathleen Davis believe the tax is unconstitutional, with their lawyer Jack McLean filing paperwork with the High Court on Thursday arguing the State of Victoria doesn’t have the power to impose such a levy.

Section 90 of the Constitution gives the Commonwealth the exclusive power to impose duties and excises and, as a tax on the consumption of goods, McLean says that’s what the electric vehicle levy is.

“I think people will be used to having income tax taken by the federal government, GST and the fuel tax taken by the federal government,” he said.

“There’s a reason for that – the federal government has the power to do so that the state governments do not have that power.”

Davis has been driving an electric vehicle since 2012 and says the tax is a backward step in affordability.

“It punishes electric vehicle drivers and discourages the urgent need to decarbonise,” she said.

Vanderstock believes the state government should switch its focus to getting “dirty cars” off the road instead.

McLean said the tax was “burdensome” and forced drivers to pay the government a fee for every kilometre they drive in their own car.

Victoria is the first state to impose the user-pays style levy on electric vehicle drivers and based on average mileage works out to be about $330 per year.

McLean said that was about $5000 over the life of an electric vehicle, and was an additional cost people would be considering when choosing to buy.

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A timeline for the case is expected to be set within the coming weeks and months, but a hearing is unlikely until early next year.

The High Court challenge has prompted renewed calls to scrap the South Australian Government proposal to introduce an identical EV tax in 2027.

Australia Institute SA Director Noah Shultz-Byard said there was now a “serious legal cloud” hanging over the Marshall Government’s proposed EV road tax.

“It would be foolish for the State Government or the Parliament to legislate this backwards tax while an identical policy in Victoria is being challenged in the High Court,” he said.

“The Parliament should delay its consideration of this tax until these legal questions have been answered.”