• Australia’s leading industry group has pitted itself against the Victorian government’s proposed electric vehicle tax.
• Victoria’s policy could lead to EVs having a 25% lower share of new sales in 2050 than projected, experts say.
• “Our slow uptake of clean vehicles is holding back national progress,” chief executive of Australian Industry Group Innes Willox told Guardian Australia.
• Visit Business Insider Australia’s homepage for more stories.

Australia’s leading industry group has called out the Victorian government’s latest electric vehicle tax, saying Australian regulations are holding back what could be a thriving industry.

Its statement comes in response to legislation introduced last month to Victorian parliament to impose a tax on electric cars and other zero-emissions vehicles.

Innes Willox, chief executive of Australian Industry Group, which represents more than 60,000 businesses, told Guardian Australia that the extra costs will only serve to deter consumers and slow efforts to lower emissions.

Such taxes “should not be implemented until clean vehicles are better established and the taxes are better designed” Willox said.

The bill that’s currently before the Victorian government would introduce a per-kilometre road tax for electric vehicles and other emissions vehicle users.

If it’s passed, starting July 1, 2.5 cents will be charged per kilometre for electric and zero emission vehicles and a 2 cent charge for the same for plug-in hybrid-electric vehicles.

The state is arguing that EV owners don’t have to pay a fuel tax, or GST on petrol, diesel and gas that other car owners pay, and point to the tax as a way to recoup the loss.

But it means electric vehicle owners would end up paying an extra $330 a year on average compared with other motorists, who pay almost $600 a year in fuel taxes, according to the state government’s calculations.

Willox said that while road infrastructure needs to be paid for, particularly in the transition over the long term as batteries and fuel cells replace petrol tanks in Australia’s car fleet, “Australia is currently well behind our peers in that transition.”

“Our slow uptake of clean vehicles is holding back national progress towards emissions targets,” she said, adding that it’s also increasing pressure on every other part of the economy to deliver cuts.

Industry groups say policy will halt Australia’s EV uptake by 25%

Australia trails nearly all comparable countries on EV uptake.

In 2020, electric vehicles made up 0.75% of new car sales in Australia, which while up from 0.6% in 2019, trails the UK for example, where sales were up 10.6% in 2020, and China where sales figures in China are expected to reach about 3.7 million in 2021.

Analysis by Dr Jake Whitehead, e-mobility fellow at the University of Queensland Dow Centre for Sustainable Engineering Innovation & School of Civil Engineering, found Victoria’s policy could lead to EVs having a 25% lower share of new sales in 2050 than otherwise expected.

In December last year states were warned in a leaked report to the Board of Treasurers – a states and territories forum that a road user tax on clean cars introduced without other support for the technology could discourage its uptake and impede greenhouse gas emission reductions

The report, written by the Victorian Treasury, suggested that a new form of charge was warranted because the rise of cleaner cars would reduce revenue from fuel excise paid on petrol and diesel, which it described as a “proxy charge” on road use.

But it also found that a road user tax without new incentives to make EVs more attractive could discourage EV uptake, slow emissions cuts and potentially skew the market towards fuel-efficient fossil fuel cars.

While federal and state governments are supporting plug-in charging infrastructure across much of the country, only the Australian Capital Territory has developed policies to drive greater uptake of EVs, which are expected to reach price parity with petrol cars within about five years.

The ACT has promised interest-free loans of up to $15,000 for zero-emissions cars and free registration for two years for new EV purchases.

New South Wales has also publicly floated an EV road user tax, with treasurer Dominic Perrottet saying he wants to take a plan to cabinet next year.

A national EV strategy promised by the Morrison government February last year has not yet been released, and has been rolled into a broader “future fuels” transport package.

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