Taxing Electric Vehicles !

 The tax on electric vehicles is beginning to take shape.  Both Victoria and South Australia have announced a tax regimen that will impose a cost of 2.5 cents a kilometre on owners of electric vehicles. This will replace the existing tax arrangement on petrol and diesel where the tax is collected at the fuel pump.

There is the expectation that this will quickly become the arrangement put in place across Australia.  The technology is in place to make it work and motorists are already accustomed to paying their dues for using toll roads by exactly this same method.

It will most likely require the car owner to maintain a positive credit balance in his or her car account and the tax will be progressive.  Car movement will see the tax instantly applied to that account in a similar manner to the amount of petrol in the fuel tank of a combustion engine car.  The car owner will instantly know what credit balance remains.

It is quite possible that a negative credit balance may result in the car shutting down but the traffic jams on busy freeways this would cause may make that impractical.  Collecting fuel tax at the pump had the advantage that the tax was paid as the fuel flowed into the car.  With electric vehicles, the fuel is already in the car's batteries and so what is being applied is really a " movement tax ".

Initially, this is likely to be applied as a " flat rate ", but there are obvious advantages in using it as a means of traffic control.  The rate per kilometre could increase to discourage car use in the centre of the city at peak times and off peak mileage could attract a discount.

One of the advantages of this type of car tax is it is totally disassociated from the way electricity is stored in the car batteries.  That may be by way of a roadside " fast charger " or the slow overnight restoration of battery levels by plugging into the household electricity supply.

The car manufacturers were hesitant to commit to high volume electric production as they awaited public  reaction and statistics suggest that the Australian car fleet will only be about sixty-five percent electric by 2050.   We are relying on the evolution of electric vehicles to rebalance the amount of carbon increasing the world temperature and this rate will need government measures by way of incentives if electric targets are to be achieved.

Electric vehicle take-up here is slower than in OECD countries and this is probably because of the greater driving distances involved, but electric vehicles will have a clear advantage in  city areas which is where most Australians live.

 What remains to be seen is whether the mix of Federal and state taxes, including what is termed " Green slip insurance " will be combined and encompassed in this " movement tax ", and how it will affect the commercial rate of things like deliveries and cab fares.