Australian High Court reverses ‘world’s worst EV policy’

The Australian High Court has reversed a tax on EVs levied by the Victorian state government, which was hailed as the “worst EV policy in the world” as it taxed EVs and not gas-powered vehicles.

In 2021, the Victorian State Government proposed a tax on EVs, with the rationale that it needed to make up lost road revenue, a common fossil-industry talking point used in attempting to disadvantage EVs. The proposal was met with opposition from businesses across the automotive, green, and healthcare sectors, and was heavily lampooned for how bad of an idea it was. And yet, the state went forward with the policy anyway.

VIctoria’s tax amounted to 2.5 cents per kilometer, and would require EV owners to keep records of their mileage for five years, a burden that is not required of gasoline car owners. It was also implemented not long after apocalyptic fires, exacerbated by climate change, had spread across the whole country of Australia, and while Victoria’s neighbors in New South Wales had, in contrast, implemented some extremely good pro-EV policies.

We and others have covered many times before why these taxes are a bad idea in most cases, because they unfairly target a minority of road users who are not responsible for the problem these taxes claim to solve, plus there are much better solutions available.

But Victoria’s case was still egregious, because at an average cost of ~$330AUD per year, not only was the tax higher than any of the (also boneheaded) EV taxes implemented in US states so far (although, to be fair, Victoria’s tax was at least based on mileage, rather than one-size-fits-all), but it also stood out because Victoria, Australia in fact collects zero tax on gasoline.

In Australia, gasoline taxes are collected by the federal government, not by state governments. So Victoria does not collect any tax on gasoline, and therefore one cannot say that their implementation of an EV tax had anything to do with mandating equal treatment.

Two EV owners made this argument in court, stating that the Victorian government is not allowed to impose an excise tax, as that is the purview of the Australian federal government only. The Australian federal attorney general (and, for some reason, the Australian Trucking Association) agreed with the EV owners, while other Australian state attorneys general sided with Victoria in the lawsuit.

And today, the Australian High Court agreed with the EV owners, and struck down Victoria’s EV tax.

The ruling would likely stop other Australian states from implementing similar taxes, and if they did want to find a way to tax EVs specifically, they will at least need to go back to the drawing board and find a different way (perhaps, as we have suggested many times before, they could move to a scheme that taxes all vehicles based on weight, mileage, and air pollution, so that the societal costs of every vehicle are properly accounted for).