The High Court of Australia has ruled against the Victorian government’s tax on electric and plug-in hybrid vehicles. The tax, known as the Zero and Low Emission Vehicles (ZLEV) road user charge, imposed a fee on drivers based on the distance they traveled. The government argued that it was necessary for all road users to pay their fair share for the maintenance and development of roads, as traditional vehicle drivers paid fuel excise through the purchase of petrol and diesel. However, the court found the tax to be invalid under section 90 of the Constitution, which reserves the power to impose customs and excise duties exclusively to the Commonwealth.
The majority of the court determined that the ZLEV charge was effectively a duty of excise rather than a user charge, making it unconstitutional. It was the first time in the 21st century that section 90 of the Constitution had been examined by the High Court. The ruling has been hailed as a landmark constitutional decision and is expected to prevent other states from implementing similar taxes on electric and plug-in hybrid vehicles.
Lawyers have noted the potential implications of the ruling, suggesting that it could hinder state governments’ ability to impose taxes on various goods. Matthew Cridland, a partner at K&L Gates, raised concerns about the impact on stamp duty and taxes related to transfers of business and infrastructure assets.
The case challenging the tax was brought by Chris Vanderstock and Kath Davies, who welcomed the court’s decision. They criticized the tax as the “worst EV policy in the world” and believed that it discouraged people from buying electric vehicles and penalized existing owners.
Meanwhile, the federal government has not yet implemented a road user charge for electric vehicle drivers. Federal Treasurer Jim Chalmers stated that the government’s current focus is on developing strategies for electric vehicle infrastructure. He suggested that a tax for electric vehicle drivers may be considered in the future but did not provide a specific timeline.
The ruling follows the findings of the Victorian Ombudsman Deborah Glass, who determined that the ZLEV charge was administered unfairly. She highlighted cases where drivers were still charged the tax despite paying fuel excise on the same kilometers traveled. The lack of charging stations in remote areas of Australia meant that drivers of plug-in hybrids had to rely on fuel for long distances.