South Australia’s controversial new electric vehicle charge has been labelled “a big tax on not polluting” by policy analysts and the EV industry.
It comes as MG launches the lowest price electric vehicle on the market in Australia yet – a $40,000 SUV crossover – that is about $10,000 cheaper than its nearest rival, the Nissan Leaf.
Noah Schultz-Byard, South Australian director at the Australia Institute, said the decision in South Australia – the first in the nation to introduce such a charge – would only made it harder for people to go electric just as it was getting easier.
“Putting a tax on a car because it doesn’t produce any pollution is ridiculous. It’s like saying someone who gives up smoking no longer pays the tobacco excise, so they need to pay a penalty for having given up,” Schultz-Byard said.
“People can make arguments for or against, but now is not the time when the upfront cost of an EV is still higher than a petrol car. Right now the cost of batteries that go into electric vehicles has been dropping steadily and is expected to drop in the years to come.
“Slapping a tax on that will only raise the barrier back up. This might scare a lot of people away from buying an electric vehicle, which is the opposite of what we want.”
The move was announced in the state budget where treasurer Rob Lucas explained the decision by saying it would make road use more equal.
Lucas wouldn’t be drawn on the size of the charge but did say it was expected to raise $1m a year starting in July 2021 and that it would include both an upfront cost and an additional charge on distance travelled.
Dr Jake Whitehead, a research fellow with the University of Queensland, said this didn’t stack up as money generated from road taxes is split between state and federal governments.
Less than half this money is then spent on road transport projects, while the rest goes to general revenue.
“Basically, what they’re saying [to EV owners] is you should continue to pay stamp duty, registration and we’re going to throw in an extra tax. Basic economics is that you make the price higher, you decrease demand,” Whitehead said.
“What we’re seeing is that EVs are being a scapegoat for falling fuel excise taxes, when the excise declines are actually because of more hybrid and fuel-efficient cars being introduced.
“The expected outcome from my perspective, is that you’ll put a tax on EVs, that will be a disincentive [to buy] EVs, those buyers will then buy hybrid or fuel-efficient vehicles and that will exacerbate the issue with fuel excise. That’ll only make the issue larger.”
Behyad Jafari, chair of the Electric Vehicle Council, said his worry is that South Australia will set a precedent that will lock in bad policy across the country.
“Automotive companies simply won’t bring EVs to our market,” Jafari said. “South Australia has one of the lowest uptakes of EVs in the world and to now become the world’s first countries to provide a net tax or net disincentive is the wrong move.”
The decision came as a surprise given the state’s recent good work in the area.
South Australia has committed $18m to build nearly 200 new vehicle charging stations and only announced last week it would be transitioning the government fleet to electric. Energy minister Dan van Holst Pellekaan said the change would begin immediately and was expected to be completed by 2035.
Jafari described the decision to impose the new tax as “maddening”.
“South Australia has a net zero emissions target for 2050 and is aiming to halve their emissions by 2030. Most of their emissions comes from the transport sector,” he said.
“They were on track before but just by putting a tax on EVs like this, their target is window dressing.”
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