Fuel excise collections fund the construction and maintenance of roads, with the Australian federal government currently charging light vehicles 42.7 cents per litre (cpl) and heavy vehicles 25.8 cpl. This equates to a light vehicle paying approximately $4.20 per 100 kilometres and a heavy vehicle more than $10.00 per 100 kilometres.
The increase in use of electric and hydrogen vehicles continues to impact revenue collections (no taxable fuel, no fuel excise), and whilst the federal government is working out how to address this issue mid-term through the Heavy Vehicle Road Reform, the Victorian government has moved to pass a bill titled “Zero and Low Emission Vehicle Distance-based Charge Bill 2021” (ZLEV Charge). If the bill is implemented as law, the ZLEV Charge will apply from 1 July 2021 to Victorian-registered ZLEVs at a rate of:
- 2.5 cents per kilometre on public roads or $2.50 per 100 kilometres for ZLEV that are electric or hydrogen vehicles, or
- 2 cents per kilometre on public roads or $2 per 100 kms for ZLEV that are plug-in hybrid electric vehicles.
The rate will be indexed in line with the Consumer Price Index, and critically, the new charges will not apply to heavy vehicles. A person who uses a ZLEV is required to be registered and submit ongoing returns to the Victorian government. The move is seen by the Victorian government as addressing the inequity in road funding contribution between ZLEVs and liquid fuel-using vehicles; however, it has been met by fierce criticism by those looking for the government to encourage use of ZLEVs.
This is the first step in an overhaul of Australia’s road tax scheme, which will ultimately see the federal government removing fuel excise and implementing a broad-based mass distance charge. With the federal government currently weighing up its options, the move by the Victorian government is the first move to fill the revenue gap.
TECHNICAL INFORMATION CONTACTS:
Chris Sant
Fuel Tax Leader
Ryan
0404 382 854
chris.sant@ryan.com
Jordan Lo Russo
Manager, Indirect Tax
Ryan
0430 512 066
jordan.lorusso@ryan.com
Jon Graham
Chief Operating Officer, Australia
Ryan
jon.graham@ryan.com
0404 822 809
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.