Applying a road user charge to electric vehicles

Summary of proposal

Party

Independent

Policy Topic

Infrastructure and transport

Portfolio

Infrastructure, Transport, Regional Development and Communications

This proposal would introduce a road‐user charge on battery electric vehicles and fuel‐cell electric vehicles, levied on a per‐kilometre‐travelled basis. The road‐user charge would be calculated as a proportion of the fuel excise that is currently paid by a driver of a passenger vehicle that has average fuel usage for Australia. For the purposes of this proposal average fuel usage is defined as the average passenger vehicle fuel usage in Australia in 2016, which was 10.5 litres of fuel per 100 kilometres, or 0.105 litres per kilometre. The proposed road‐user charge per kilometre is therefore specified as the fuel excise paid on 0.105 litres of fuel (estimated to be around $0.048 per kilometre in 2022‐23). As the fuel excise rate is indexed annually by the consumer price index (CPI), the road‐user charge would increase over time in line with movements in the CPI.

The road‐user charge would be phased in over time in accordance with the following profile.

Year 1: road‐user charge set at 20 per cent of the estimated fuel excise per kilometre driven.
Year 2: road‐user charge set at 40 per cent of the estimated fuel excise per kilometre driven.
Year 3: road‐user charge set at 60 per cent of the estimated fuel excise per kilometre driven.
Year 4: road‐user charge set at 80 per cent of the estimated fuel excise per kilometre driven.
Year 5 and onwards: road‐user charge set at 100 per cent of the estimated fuel excise per kilometre driven (estimated to be around $0.053 per kilometre in 2026‐27).

In order for the road‐user charge to be collected, the number of kilometres travelled by electric vehicles would be reported monthly to the Australian Taxation Office (ATO). The ATO would then charge each vehicle’s road‐user charge liability to its owner on a monthly basis.

The proposal contains four options for its start date: