Car makers want to replace licence fees, rego and fuel excise with a tax on how far you drive Loading 3rd party ad content Loading 3rd party ad content Loading 3rd party ad content Loading 3rd party ad content

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By Rob Harris

The car industry is urging the federal government to lead a national overhaul of vehicle registration, stamp duty, licence fees and fuel excise and replace them with a single road-user charge to instead tax drivers for every kilometre they drive.

A body representing the major car manufacturers wants Canberra to intervene before several state governments progress with their own plans to levy electric vehicles per kilometre and capitalise on the consumer take-up of new technology vehicles to reform several inefficient taxes on drivers.

The Federal Chamber of Automotive Industries want to fast-track a nationally consistent
and efficient approach to road user charging.

The Federal Chamber of Automotive Industries want to fast-track a nationally consistent and efficient approach to road user charging.Credit:Eddie Jim

Three states – Victoria, South Australia and NSW – have flagged new taxes on electric cars based on distance travelled, with the Andrews government seeking to pass new laws charging electric and other low-emissions vehicles 2.5-cents per-kilometre driven and 2 cents for plug-in hybrids.

Advocates for the new technology have lashed out at the states, warning the taxes could harm take-up, which already lags behind much of the world.

Federal Chamber of Automotive Industries chief executive Tony Weber said as Australians embraced technological advances it was the time for governments to gain the “courage to overhaul outdated practices” and relieve drivers of a myriad of “outdated, confusing and inefficient charges”.

“An efficient road-user charging scheme can address all vehicle users regardless of the type of vehicle they drive, how often it is driven and the purpose of the travel,” Mr Weber said. “For example, it could be based on vehicle mass, distance travelled, time of travel or a combination of factors.”

The chamber’s discussion paper, to be released on Wednesday, lists several potential scenarios including the capacity to build in congestion and peak-hour charges on motorists to help clear grid-locked freeways in Melbourne and Sydney. It says SIM connectivity already exists in new internal combustion engine, plug-in hybrids and battery electric cars to monitor travel without tracking their journeys and raising civil liberty concerns.

Mr Weber said while the industry believed road-user charging should not be technology-specific and must be nationally consistent, he supported the Victorian government’s plan to introduce a road-user charge.

“Over the longer term we believe a comprehensive approach to road-user charging that remains technology-neutral will result in a greater benefit to motorists and to governments. Opportunities for important reforms like this are not common,” he said.

A raft of economists have called for a road-user charge, including former Treasury secretary Ken Henry in his tax review and Ian Harper in his 2015 competition policy review.

Former major projects minister Paul Fletcher promised in November 2016 the government would examine options for a shift towards the scheme but shelved an inquiry in 2018 following the ousting of Malcolm Turnbull as prime minister and avoided the politically fraught issue in the run-up to the 2019 federal election.

Public sector road-related revenue primarily comprises state-levied vehicle registration, licence fees and stamp duties on cars as well as the Commonwealth-levied fuel excise and GST. Although none are hypothecated toward road funding, they form a significant part of total government revenue, a large proportion of which is directed toward road-related funding.

Fuel excise is the largest source of road-related revenue but despite a growth in population, the vehicle fleet and total vehicle kilometres driven, revenue from fuel excise continues to decline in real terms as newer, safer vehicles with reduced fuel consumption hit the roads. The 2020-21 federal budget forecast that $49.36 billion in net fuel excise would be collected over the next four years.

The Australian Automotive Association, the peak organisation for Australia’s motoring clubs, including the RACV and NRMA, has argued that irrespective of technological shifts, the fuel excise was “an inequitable tax” and called for “urgent national leadership and coordination”.

Infrastructure Partnerships Australia chief executive Adrian Dwyer – whose organisation has been a vocal advocate for EV taxes – said calls for a Commonwealth-led approach were “delightfully quaint” but had proven a “policy cul-de-sac”.

“The constitution is clear, the states hold all the levers here, and a national approach must be state-led. Victoria is taking that lead, NSW is following suit,” Mr Dwyer said.

“Technology neutrality is a good principle, but the current system isn’t neutral, it specifically charges only one technology set while the future of transport technology is entirely missed.”

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