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The High Court shocks the nation: Dismissal of the Electric Vehicle Tax

This week a controversial Victorian Electric Vehicle tax law was deemed unconstitutional by the High Court. The landmark judgement has ruled the State of Victoria was in breach of the constitution by imposing a distance-based tax on plug-in hybrid and electric vehicles.

NSW was set to introduce a similar system, but now this is unlikely to go ahead. The states are scrambling to find a way to replace lost revenue from fuel excise levies as drivers transition to electric vehicles. But the high court has decided this current method isn’t the way.

The High Court had to decide whether the power to issue a charge like the electric vehicle tax sat with the federal government or the state. In particular, they had to decide whether the EV tax was an excise. Under the Constitution, only the federal government can impose excises. Their decision found it was an excise.

What does this mean going forward?

All states have emissions targets and while we need to meet those, the lost revenue is a concern for the Government. Essentially, the states will be looking for other taxes to implement in the future and were not sure how this will look.

The Electric Vehicle Council’s chief executive Behyad Jafari said “There is nothing inherently wrong with road user charges, but they should never be calibrated to discourage the take up of electric vehicles. Any road user charge scheme should be national, and we now look forward to working with the federal government on sensible road funding reform, without singling out drivers who are trying to do the right thing”.

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