Changing the Tax Regime !

Every year the efficiency of those solar photo-voltaic cells we have on the roof of our homes to convert sunlight into electricity notches a little higher and its production cost slips lower.  The car industry has long dreamed of the evolution of an electric car that generates its own fuel from sunlight, but that seems impossible given the lack of sunlight on stormy days and the need to use cars at night.

The car industry is very interested in Australia's Solar Challenge which is a race from Darwin to Adelaide by cars built to run solely on solar energy.  Both the times and the speed improve each year and the statistics over this three thousand mile event have become impressive.

All the major car manufacturers are running tests to integrate solar into cars of the future and Toyota now claims that its rooftop model is capable of adding up to fifty kilometres a day to the range of its electric cars.  It seems inevitable that we will soon see cars with solar in place to constantly renew some of  the charge in the car batteries on sunny days.

That will be another headache for the planners trying to devise a way to recover the tax levied on petrol and diesel when electricity replaces that fuel source.  The option of taxing the electricity that flows through fast charging stations would be unworkable if cars could be recharged through the householders electricity supply and from solar built into the car roof.

That tax on oil products was perhaps the perfect tax regime. Petrol or diesel were essential for the internal combustion engine, and the tax was collected at the fuel pump.  It is becoming evident that many households will disconnect from the state electricity supply and install a battery to keep the lights burning at night and the family car will avoid the government fuel tax regime by drawing from this same source.

A need for a new fuel tax is becoming urgent.  The number of hybrid cars on the road is ever increasing with lower demand for petrol and it seems we are on the cusp of the all electric car becoming a production model.  As things stand, hybrid and electric car owners are enjoying a reprieve from fuel taxes and eventually this will cut into the government tax take unless a movement tax replaces the tax on fuel.

A movement tax is the only option, given both the present and future vagaries of the electricity supply.  The technology that applies to mobile phones is able to determine the actual location and movement of vehicles and the tax would vary between peak and off-peak use and the traffic density involved.  It could deliver a fairer outcome by eliminating the fixed standing charges of registration that make car ownership expensive.

Putting that in place is complex. Fuel tax is a Federal responsibility while car registration and insurance comes under state legislation..  For a time a movement tax and petrol tax will need to exist side by side as the car fleet embraces both fuel types simueltanously.  The government is probably waiting for the arrival of 5G to deliver the Australia wide cover that would make a movement tax viable.

The one thing that is absolutely certain is the tax on car fuel has to change as electric cars gain a greater share of the market.