Road user charging is essential if policymakers are to even the ledger between the taxation of electric vehicles (EVs) and regular vehicles. However, this report finds that current proposals continue the regressive nature of road user charging – hurting those who drive the most out of necessity, while ensuring higher income individuals who don’t have long commutes benefit. 

Under the current system, the Commonwealth Government charges an excise on fuel, which acts as a proxy road usage charge. EVs do not pay for fuel, and therefore aren’t subject to this tax. The Commonwealth Government is seeking a new scheme to charge EV drivers for their road usage through a different mechanism. This report outlines that this approach has significant risk.

This report proposes an alternative model – a Progressive Universal Road User Charge. It would interact with income, ensuring lower income Australians aren’t worse off, and offer a path towards eliminating the fuel excise altogether. The report recommends to use the EV transition to introduce progressivity into the road user charging system.

Key points

1. EV uptake is now highest among suburban working families.
2. Middle income earners are picking up EVs at a faster rate than Australia’s top income earners.
3. 3. With EVs becoming far more affordable, the suggestion that EVs not paying fuel
   excise is an example of high income earners avoiding tax is unfounded.
4. Those who live further from work are adopting EVs at a faster rate than those who live close.
5. The link between revenue raised from fuel excise and road maintenance funding has been minimal since 1992.
6. Road maintenance expenditure by the Commonwealth Government is only approximately 60% of the revenue generated from the fuel excise.