Luxury Car Tax for Electric Vehicles – Increase in Threshold for Electric Vehicles

Fuel and cars are complementary goods, one without the other is useless. The government uses this to its advantage to create an additional source of taxes. However, this isn’t a niche technique to increase tax revenue, the tax revenues are dedicated towards all forms of transportation improvement. For unleaded fuel prices, the government has set a 41.8 cents per litre fuel excise. Considering the mass number of cars and vast ranges of kilometres are driven on the Australian roads, it is clearly an important issue that needs to be considered. Taken into the factor, the growing trend of electric cars in the future, this will mean fewer tax revenues from fuel excise. “NSW government figures show of the 6.6 million vehicles registered last year, 2274 were electric, a 25 per increase, on the year before” reports the SMH. As yet there are also no taxes on ev chargers australia

There is another aspect of vehicle tax, that is the luxury taxes. Any car that is above the threshold of $77,000 will incur a tax of 33% of the cost of the vehicle. So, a Tesla Model 3 performance version will be in this tax bracket. Across the board, the majority of the EV is the price above average compared to the rest of the car industry. This disincentivizes potential customers from purchasing electric vehicles. Further-more this discourages consumers towards EV despite the fact of the positive outcomes EV’s provide particularly the movement towards zero-emission transport.

This is a structural problem and needs to be addressed quickly, as it may create an impingement towards transitioning towards zero carbon emissions. Coupled with benefits of electric cars, since electric vehicles assist in reducing dependency on foreign oil and save customers over 70% of the fuel cost by swapping petrol for fuel. Electric vehicles also lead to cleaner air further leading to savings in health cost and the convenience of ev charging stations at home.

The transport sector is shifting towards electric vehicles leading to massive disruption and the government has already started to prepare for the transition to a new transport system. The outdated, unfair and unsustainable road tax model is going to be futile, as Tax revenue from fuel excise has fallen 30% since 2001. The government has been sprawling to collect this revenue from other forms “The Berejiklian government must find ways to ensure electric vehicles users contribute to the cost of roads and road maintenance as traditional vehicle owners do” Mr. Secord said. Importantly EV’s are also cheaper to run with car charging stations

A holistic reform for the future transportation system that will allow less road congestion, quicker travel times, cleaner air, lower cost and a sustainable road revenue stream. The problems are present in the system but as a pragmatist, a clean solution is our golden ticket and it is out there.

ABC reports “A road user fee framework for electric vehicles as a first step, on a smaller scale, will prepare the way for a longer-term transition to a state-based road-user charging scheme where all vehicle pay for road use based on the costs they impose”.

Sam Korkees is an EV enthusiast and passionate about the transition of Australia to Electric vehicles. He believes that taxes on EV’s currently are detrimental to the industry and will further inhibit the technology. See more at

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