‘We’ve got to be bullish’: NSW ministers at odds over electric car tax

By Tom Rabe and Peter Hannam

Senior ministers have warned that NSW should not follow other states in imposing a tax on electric cars, arguing it would discourage people from buying them just when the government needed to provide incentives to get more low-emissions vehicles on the road.

Transport Minister Andrew Constance urged the government to avoid a “conversation about tax”, putting him at odds with Treasurer Dominic Perrottet, who has signalled plans for a form of the measure in coming months.

“We’ve got to be incredibly bullish on the incentive side, and signals to the market are important in this environment, because we need scale,” Mr Constance told The Sun-Herald.

“We should be incentivising the uptake of these things and not go straight into a conversation about tax … I don’t want to see the state be criticised the same way Victoria and South Australia have been.”

The Andrews Labor government in Victoria outlined a kilometre-based tax for electric vehicles earlier this month, while South Australia’s Liberal government plans to impose a similar charge.

Having decided against introducing an EV tax six weeks out from this month’s state budget, Mr Perrottet is still considering a kilometre-based fee for the new vehicles.

It is understood one option would invest the money generated from the new tax into infrastructure to encourage the technology, including charging stations.

Mr Perrottet has indicated he wants to take a plan over an electric vehicle tax to cabinet in coming months. He said he was grappling to find a sensible policy solution that would generate revenue for road maintenance in the future without impeding the growth of the industry.

“It’s a balance between ensuring as fuel excise declines that we have a fair and equitable system where people who use our roads pay for our roads,” Mr Perrottet said.

“At the same time, we don’t want to stifle innovation of more environmentally friendly vehicles and an emerging market, so that’s what I’m grappling with.”

Mr Constance pointed to last summer’s bushfires as a major reason why Australian politicians needed to focus on lowering carbon emissions before looking for new revenue streams to replace dwindling fuel excise.

“I want to see NSW the leader not only in the country but on the global stage when it comes to that new economy that’s coming whether we like it or not. – Environment Minister Matt Kean

Scepticism also exists over forecasts for vehicle ownership in Australia, which underpin how much an EV tax would generate.

Mr Constance said individual car ownership would likely decline in coming years as people turn to ride-share or other transport modes, and the government could not afford to assume there would be the same number of personal vehicles on the road next decade.

The tax could be introduced in next year’s budget or as early as the mid-year review in February.

Victoria’s tax will levy 2.5 cents per kilometre driven by electric and other low-emissions vehicles and 2 cents for plug-in hybrid electric models, and is expected to raise $30 million over four years.

NSW Environment Minister Matt Kean said Victoria’s move to tax electric vehicles handed NSW a competitive advantage.

“I want to make sure that EV drivers pay their fair share but at the same time we don’t want to stifle innovation, we don’t to disincentivise people taking up these better alternatives,” said Mr Kean, whose government car is a Tesla, the first among his colleagues to go all-electric.

“I want to see NSW the leader not only in the country but on the global stage when it comes to that new economy that’s coming whether we like it or not.”

A spokesman for the Treasurer earlier this week said the government was “actively” looking into the recommendations of an independent review of the state’s federal financial relations.

That report recommended that NSW phase in a fair and nationally compatible road user charge, which could use electric vehicles as a potential pilot.

“Revenue should be hypothecated to expenditure on roads and other transport infrastructure. Electric vehicles could be used as a pilot, with new user charges to replace some existing charges,” the NSW Review of Federal Financial Relations report said.

The other states’ moves towards taxing electric cars attracted criticism from environmental groups and the industry. Electric Vehicle Council chief executive Behyad Jafari likened SA’s decision to tax electric vehicles to “responding to a drop in the tobacco tax take by slamming a new excise on nicotine gum”.

Mr Jafari said states would not be able to reach zero emissions by 2050 if they introduced a tax on EVs. “NSW is already languishing up the back of the pack in the global race toward electric vehicles,” Mr Jafari said earlier this month.

Note: This news is a re-post of the original posted on The Sydney Morning Herald website.