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South Australia passes road usage tax for electric vehicles

5 min read
5 Nov 2021
a man with a phone sits at the driver seat of his electric car and used the console

The South Australian Government has passed a new bill introducing subsidies for new electric vehicle purchases as well as a new tax in 2027.

On 29 October 2021, South Australia’s Legislative Council passed the Motor Vehicles (Electric Vehicle Levy) Amendment Bill 2021, which includes a road user charge that will be based on the distance driven every year.

The tax was originally aiming for a 1 July 2021 implementation date before being delayed to 1 July 2022, and then to 1 July 2027 – or whenever new electric vehicle (EV) sales make up 30% of all new car sales in the state.

From then, EV owners will need to pay 2.5 cents for every kilometre driven per year.1

Taking the national pre COVID-19 average of 15,000 kilometres per year. That’s an average cost of $375 every year.

This new tax is designed to help make up the expected shortfall in the fuel excise, which helps pay for vital infrastructure and roadworks.

As more motorists transition to electric cars, governments across the nation are considering how to equitably fund the cost of maintaining their state or territory’s road networks.

Hybrid vehicle owners also will pay 2 cents per kilometre ($300 based on the same average of 15,000 kilometres per year) on top of the fuel excise (currently 43 cents per litre).1,2

What else is in the bill?

Other components of the bill include:

  • a $3,000 subsidy for the first 7,000 EVs bought after the bill is passed (this subsidy was originally for the first 6,000)
  • a new Select Committee of the Legislative Council that will be established after the first year of the bill that will focus on issues relating to EVs
  • a registration fee exemption for three years on new EVs purchased up to 30 June 20253

All in all, the package is expected to cost $22.7 million and encourage the uptake of electric cars and other EVs, while also ensuring EV owners help pay their share for road maintenance and infrastructure.

“This Bill will set the course for the continued growth of electric vehicles in South Australia through continued infrastructure investment, tax relief and consumer incentives,” Federal Chamber of Automotive Statistics (FCAI) Chief Executive Tony Weber said.

“The South Australian Government has recognised the shift in consumer preferences towards EVs and has introduced policies to fuel this growth.”

a blonde woman charging her electric car while looking at her phone

Have other states done something similar?

South Australia isn’t the first state to implement a user charge for EVs – Victoria implemented the same 2.5 cents per kilometre levy on 1 July 2021.

Based on a state average of 13,500 kilometres driven per year by light passenger vehicles, Victorian EV owners will need to pay $337.50 next year (or $270 for plug-in hybrid cars, who also pay the fuel excise).4

New South Wales is also implementing a road user charge, but it won’t take effect until 1 July 2027.

In NSW, EV owners will pay 2.5 cents per kilometre (indexed annually to inflation), while plug-in hybrid owners will pay 80% of the full road user charge on top of the fuel excise.

New South Wales EV owners are expected to pay $315 a year on average, which is much cheaper than the average $622 spent on the fuel excise.5

Queensland, however, says it’s too early to be implementing any road user charges for Electric Vehicles.

Speaking to the Brisbane Times, Queensland Transport Minister Mark Bailey said in November 2020 (before South Australia’s bill amended the date from 1 July 2021) that “you need electric vehicles to get enough momentum that their take-up won’t be slowed down by any extra levies.”6

Minister Bailey added further that an EV road user levy for Queensland was inevitable but wouldn’t happen anytime soon.

The Electric Vehicle Council (EVC) on 9 July 2021 made a submission to the South Australian Government, stating that a road user charge at this time was “premature”.

While the EVC stated they support reform to road taxes, they said they were concerned it would stifle the adoption of EVs.7

a man in leather jacket behind the wheel of his electric car

Is now the right time to buy an electric car?

These EV road user levies might not be something that EV owners are looking forward to, but it’s an important step in addressing funding issues in a future where more car owners drive an electric car.

Multiple states and territories offer incentives for those considering switching to an electric car, such as subsidies on the purchase cost, cheaper registration, stamp duty and registration fee waivers.

While the EVC notes that Australia lags behind the world in terms of incentives and market share, electric vehicle sales are growing at an exponential rate.

Australia is also currently seeing record high petrol prices, which are up 25% on this time in 2020.

According to the Australian Bureau of Statistics (ABS, these fuel increases were the largest contributor to a 2.5% rise in the cost of living.8

While EVs are quite expensive overall at the moment, there are a growing number of affordable options for commuters.

As of August 2021, there were 31 different EV models for sale in the country, and by the end of 2022 this is expected to increase to 58.9

Those in South Australia wanting to purchase an EV in the near future will want to act fast to secure a spot among 7,000 others who can claim the $3,000 subsidy sweetener.

1 Motor Vehicles (Electric Vehicle Levy) Amendment Bill 2021. House of Assembly, Parliament of South Australia. 2021.
2 Excise duty rates for fuel and petroleum products. Australian Taxation Office, Australian Government. 2021.
3 Government’s Electric Vehicle Levy Bill passes Upper house. The Hon. Steven Marshall MP, Premier of South Australia, Government of South Australia. 2021.
4 ZLEV road user charge. VicRoads, Department of Transport, Victoria State Government. 2021
5 A fair and sustainable road user charge. New South Wales Government. 2021.
6 Qld says Vic, SA jumping the gun on electric vehicle tax. Stuart Layt, the Brisbane Times. 2020.
7 Submission to the Department of Treasury and Finance, Government of South Australia on the Road User Charge for Zero and Low Emissions Vehicles: Consultation Document. Electric Vehicle Council. 2021.
8 Higher petrol prices increase living costs. Australian Bureau of Statistics, Australian Government. 2021.
9 State of Electric Vehicles. Electric Vehicle Council. 2021.

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avatar of author: James McCay

Written by James McCay

James is a devoted husband, father, and history buff. He studied Creative and Professional Writing at QUT, and is often buried in a book. He writes on a variety of topics, hoping to make a positive difference for readers through his writing.

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