Australia's federal Labor government has conceded that a road user tax to charge electric vehicle (EV) drivers will be introduced, but has not yet committed to a timeline for the plan.
The announcement came after a three-day Economic Reform Roundtable in Canberra, which canvassed government and business leaders' ideas for improving Australia's sluggish economy. The economy grew at just 1.3pc in the year to 31 March and -0.2pc on a per capita basis.
A final model for taxing EV usage was not agreed on, but conceptual support exists for the tax change, Australia's treasurer Jim Chalmers said after the summit's final session on 21 August. The treasurer, federal transport minister Catherine King and state government ministers will meet to discuss an options paper on 5 September.
A tax would add to the A$16bn/yr ($10.3bn/yr) income from the 51.6A¢/litre fuel excise that Canberra imposes on gasoline and diesel.
The turnaround comes two years after Canberra joined opposition to the state of Victoria's distance-based levy. The High Court of Australia ruled the distance-based levy invalid and said only the federal government could impose such a tax under the constitution.
That decision put New South Wales state's scheme on ice, which was due to start on 1 July 2027 or when EVs make up 30pc of new car sales. The state planned to charge drivers 2.974A¢/km for a battery EV or 2.379A¢/km for a plug-in hybrid EV, indexed to the consumer price index each financial year.
But this case was heard ahead of new emissions laws, which impose penalties starting 1 July on manufacturers that fail to meet reduction goals targets across the range of vehicles they sell.
This is expected to drive sales of low-emissions vehicles, such as EVs, higher. Transport makes up 98mn t/yr or 21pc of Australia's total greenhouse gas emissions, with government figures showing average passenger cars in Australia emit at a rate 20pc higher than the US' vehicle fleet.
EV uptake is increasing in Australia but from a low base, with battery EVs and plug-in hybrids making up 13.1pc of sales in April-June, up from 9.6pc in April-June 2024, data from the Australian Automobile Association data show.
Australia's gasoline consumption was 271,000 b/d in January-June (see table), 2.5pc below year earlier data, according to Australian Petroleum Statistics (APS). Meanwhile, diesel sales are steadier on the year.
The productivity-oriented summit failed to reach a consensus on taxation changes, 25 years after the Goods and Services Tax (GST) was introduced — Australia's last major economic reform.
But Chalmers also promised to remove hundreds of ‘nuisance' tariffs, reform the national construction code to build more housing and speed up the pace of changes to the federal Environment Protection and Biodiversity Conservation Act, after failing to do so in its previous term.
| Australia's road transport fuel sales | (b/d) | ||||
| Jan-Jun '25 | Jan-Jun '24 | Jan-Jun '23 | y-o-y ± % | 1H '25 v 1H '23 | |
| Gasoline | 271,000 | 278,000 | 277,000 | -2.5 | -2.2 |
| Diesel | 567,000 | 568,000 | 558,000 | -0.2 | 1.6 |
| Source: APS | |||||
