State based EV road user charge (Overturned 18/10/23)

[Vostok]

Self reporting is cumbersome and error prone.

Not if well designed. When the RUC is in effect and an EV driver goes to Service NSW to pay their rego online, they already know whether you own a vehicle that is subject to the RUC, and whether a rego inspection is required or not.

Some simple software says (if vehicle is subject to RUC) and (vehicle is less than 5 years old) then (ask owner to submit odometer reading). Simple data validation would check whether the number entered is greater than the number from the previous year. If not, the entry would be rejected and you would be asked to enter it again.

Also if the odometer reading looks suspiciously low a popup could ask for positive affirmation that the value entered is true and correct, with a warning that entering false data is fraudulent and punishable by a fine of $X or whatever.

And if someone is setting out to break the law and deliberately circumvent the system, it will all catch up with them at year 5 when an independent party enters the odometer reading, or at the time of sale if registration is transferred in less than 5 years, since the buyer would insist on seeing the odometer reading and not sign a transfer with an understated reading on it. Otherwise, they end up paying the RUC at next rego.

Tolls can be targeted and has zero operational cost and no errors.

I don’t think using existing tolling as a proxy is suitable. It’s not sufficiently representative (e.g. there are no toll roads in NSW outside of metro Sydney) and would simply encourage further toll avoidance behaviour.

 

[Maximillan]

I don’t think using existing tolling as a proxy is suitable. It’s not sufficiently representative (e.g. there are no toll roads in NSW outside of metro Sydney) and would simply encourage further toll avoidance behaviour.

But it would provide Transurban or any other private operator a secure revenue stream whilst delivering limited future benefit to society.

 

[alliwantisaY]

Honestly I think the easiest way to do it, is just charge a surcharge on the annual rego. The system is there, the registration people know who has an EV but it wouldn't be usage based, just a fixed charge. Not sure what would be appropriate but just work out an average amount, maybe $200 and just charge it to ever EV owner (maybe 50% off for PHEV).
It's still state based but I actually don't have an issue with the idea of charging EV owners something make up for fuel excise regardless of one being federal and one state. If the Feds want to do something then I'm sure each State based transport department could send them a report on who has a PHEV or EV and they can send me an fixed price invoice as I think the km/odometre system is just messy.

PS in the Wild Wild West there is no tolls or annual inspections so those ideas won't work here.

 

[paulp]

Honestly I think the easiest way to do it, is just charge a surcharge on the annual rego. The system is there, the registration people know who has an EV but it wouldn't be usage based, just a fixed charge. Not sure what would be appropriate but just work out an average amount, maybe $200 and just charge it to ever EV owner (maybe 50% off for PHEV).
It's still state based but I actually don't have an issue with the idea of charging EV owners something make up for fuel excise regardless of one being federal and one state. If the Feds want to do something then I'm sure each State based transport department could send them a report on who has a PHEV or EV and they can send me an fixed price invoice as I think the km/odometre system is just messy.

PS in the Wild Wild West there is no tolls or annual inspections so those ideas won't work here.

The fuel excise is intended as a sort of user pays system, ie you drive more you pay more. I cannot see a flat tax being pallitable to most.

 

[gm12]

The fuel excise is intended as a sort of user pays system, ie you drive more you pay more. I cannot see a flat tax being pallitable to most.

Which begs the question about what the fuel excise or EV tax trying to achieve?. A tax has to have a reason.

Fuel excise is probably designed to reduce road use, congestion and pollution. I'm not sure it actually stops people driving to be honest.

EV's don't polute, so if the tax goal is to reduce pollution EV's shouldn't be taxed.


If you just want to raise revenue, then a flat fee per car at Rego time (like Singapore) would be the easiest.

 

[ZeeDoktor]

Roads need to be maintained. The amount of maintenance is directly dependent on the amount of road use (variable cost), plus some fixed environmental deterioration that occurs whether anybody uses the road or not (fixed cost).

It seems quite logical everyone should pay for their fair share of use of a common good, i.e. heavy users should pay more than light users.

ICE pollution causes substantial ancillary costs to the healthcare system, about $8k per annum per petrol vehicle if I remember the lung association's numbers correctly. It also has significant impact either directly or via anthropogenous climate change on environmental protection and conservation. It therefore needs to be discouraged by charging higher usage fees. That concept is commonly understood in Europe - acceptance rising proportionally to the quality of life index and average population education of each country. It's only in environmental third world countries like the US and Australia that this is not a commonly accepted practise.

In an ideal world, the political agenda here would therefore look as follows:

1. ICEs need to be phased out and prohibited by 2030 at the latest. Their use until then should be discouraged by ramping up fuel excise to many times the current levels. The taxation surplus should be used to subsidise EV acquisition costs by way of removing any duties on their purchase and simplifying compliance on imports. Perhaps consider switching to left hand drive... oh shock and horror! Sweden did it in the 1970s or thereabouts. It can be done, and it would lower import cost.

2. Significant public fund investments need to be made into charging infrastructure and renewable electricity generation. With as much sun and wind as we have in Australia, it borders on criminal neglect to allow electricity be made with coal and gas.

3. Implement road use charges for all vehicles, so the RUC is equal for all. The more you drive, the more damage you cause to the roads, the more you pay. Simples. No freebies for those who paid duties on their EVs (that includes me), just a simple across the board km tax on all vehicles.

4. Retrain all coal and gas workers to become electricity workers/renewables/giant battery bank installers. Give them job security. That'll pull the rug right from under the pub test.

5. Nudge the petroleum, coal, and gas industry into the renewables market by way of incentives and some punitive measures where it hurts, if needed.

Would anyone vote for me?

 

[paulp]

Which begs the question about what the fuel excise or EV tax trying to achieve?. A tax has to have a reason.

fairly sure both are creating a user pays mechanism for road construction and maintenance

 

[RareEarth]

Although this would upset the big trucking companies, perhaps a decent rail freight network would help - getting some heavy trucks off roads. This would lower maintenance costs.
I read somewhere that only about 2% of east coast freight was carried on rail?

As for a user pays system, would those in the country who drive silly numbers of kilometres in the course of their lives accept it?

 

[paulp]

Although this would upset the big trucking companies, perhaps a decent rail freight network would help - getting some heavy trucks off roads. This would lower maintenance costs.
I read somewhere that only about 2% of east coast freight was carried on rail?

As for a user pays system, would those in the country who drive silly numbers of kilometres in the course of their lives accept it?

Long distance drivers already accept the user pays system known as fuel levy, but unlike the distance based EV tax it is somewhat concealed in the price of fuel

 

[gm12]

fairly sure both are creating a user pays mechanism for road construction and maintenance

They aren't.

 

[gm12]

Although this would upset the big trucking companies, perhaps a decent rail freight network would help - getting some heavy trucks off roads. This would lower maintenance costs.
I read somewhere that only about 2% of east coast freight was carried on rail?

As for a user pays system, would those in the country who drive silly numbers of kilometres in the course of their lives accept it?

In a true user pays system a truck would be paying 100x the per km rate a car should considering the damage they do to roads.

 

[Vostok]

Perhaps consider switching to left hand drive... oh shock and horror! Sweden did it in the 1970s or thereabouts. It can be done, and it would lower import cost.

Sweden has land borders and was the odd-one-out on the continent in being RHD, so it made sense for them to swap over to LHD.

Australia has no land borders and any “benefit” in switching to LHD would be swamped, by many orders of magnitude, by the cost in changing around all the road infrastructure. Australia is a very, very big country.

All the road signs would need to be moved to the other side of the road, as would traffic lights, road markings redone (e.g. where you can overtake in one direction, but not the other), turning bays on multilane roads would now be on the wrong side of the road and need to be reconstructed, asymmetric ramps to/from freeways would need to be demolished and reconstructed, etc. It would be a nightmare!

In any event, Samoa changed from LHD to RHD in 2009. Why? “to reduce reliance on expensive, left-hand-drive imports from America” and access second hand cars from Australia and New Zealand to lower the cost!

 

[gm12]

The fuel excise also has an effect of helping out balance of trade. By raising the cost of fuel, thereby reducing the amount consumed (economics 101) we lessen the amount of fuel we need to import.
Electricity is only domestically produced, so not relevant to an excise or levy for the above reason.

 

[ZeeDoktor]

Switching to LHD is probably not the highest priority item from the list of actionable items I mentioned...

 

[Candleflame]

or they could just allow LHD vehicles in Australia. Its not like its an issue anywhere else. I drove a LHD for years when I lived in the UK. Theres drawbacks, but also advantages.

 

[RareEarth]

They could do the LHD conversion over a couple of weeks: week 1 trucks and buses, week 2 cars...

 

[OzVic]

It seems quite logical everyone should pay for their fair share of use of a common good, i.e. heavy users should pay more than light users

Roads are a common good. Society does not exist in any recognisable form without them. Whether you drive or not they need to be paid for. Why penalise country folk, truck drivers that keep the food / goods / economy going, couriers, farmers, postmen, bus drivers, miners or people that require long commutes to get to their medical appointments because of circumstances that are out of their control?

Whether you have a car or not, you use and require roads. To get your shopping. To get your mail. To get to the doctor. Why shouldn't EVERYBODY contribute?

Roads are a requirement of modern civilisation, and should be paid out of general taxes ie. "consolidated revenue".

Sure, incentivise cleaner energy (eg. remove fuel excise and add a carbon tax). Use incentivisation levers for more or less usage of particular roads if needed (eg. congestion).

BUT, every road should not be made a TOLL road! It's every state governments wet dream.

As an aside .. the majority of roads most of us drive on are maintained by LOCAL government and the majority of that is paid by rates (a general tax!) .. NOT by the state or federal government. Making every road a toll road is just a filthy money grab.

Transport and infrastructure are significant areas of expenditure for all councils. In 2018-19, councils spent $8.3 billion on transport, primarily on roads. While some funding is provided by the Australian and state/territory governments, roads are primarily funded from the council’s rate base. In 2018-19 Councils collectively collected $18.9 billion in rates.

Roads Funding - Australian Local Government Association

Transport and infrastructure are significant areas of expenditure for all councils. In 2018-19, councils spent $8.3 billion on transport, primarily on roads. While some funding is provided by the Australian and state/territory governments, roads are primarily funded from the council’s rate base...

alga.com.au

 

[gm12]

Roads are a common good. Society does not exist in any recognisable form without them. Whether you drive or not they need to be paid for. Why penalise country folk, truck drivers that keep the food / goods / economy going, couriers, farmers, postmen, bus drivers, miners or people that require long commutes to get to their medical appointments because of circumstances that are out of their control?

Tolls are the answer if you go for the extreme user-pays scenario, which is the justification for the EV odometer tax.


However I agree with you. Road maintenance should, and does, come out of general revenue.

Fuel excise is a tax on pollution and foreign imports of fuel. Ie a carbon tax.

And an EV odometer tax is the fossil fuel industries answer to combat loss of market share.

 

[Chuq]

My main issue is that a per km rate is highly labour intensive to administer. One option I like is to gradually merge whatever revenue was raised via fuel excise, into income tax. Simply gradually change the tax brackets so the revenue grows in line with the reduction of fuel excise. It's rolled into an existing system, so effectively no effort to administer.

Remember fuel excise revenue doesn't 1:1 fund the roads, so it doesn't need to come from roads directly - and people without cars still benefit from roads (buses, taxis, ambulances, transport of goods).

Who would pay less? Those on minimum wage incomes who need to drive a lot for their jobs, or students who need to drive to get to school/uni - I'm fine with that.

Who would pay more? Those on high incomes who don't drive much. This could be controversial, but I don't mind that - they can afford it and they're probably minimising their tax a fair bit anyway.

Main caveat - I'm not aware what percentage of excise revenue comes from large commercial vehicles (buses, trucks) - pushing all of this onto income tax might adversely affect individuals. There may need to be a component of revenue that comes from commercial vehicle registration or similar.

 

[paulp]

My main issue is that a per km rate is highly labour intensive to administer. One option I like is to gradually merge whatever revenue was raised via fuel excise, into income tax. Simply gradually change the tax brackets so the revenue grows in line with the reduction of fuel excise. It's rolled into an existing system, so effectively no effort to administer.

Remember fuel excise revenue doesn't 1:1 fund the roads, so it doesn't need to come from roads directly - and people without cars still benefit from roads (buses, taxis, ambulances, transport of goods).

Who would pay less? Those on minimum wage incomes who need to drive a lot for their jobs, or students who need to drive to get to school/uni - I'm fine with that.

Who would pay more? Those on high incomes who don't drive much. This could be controversial, but I don't mind that - they can afford it and they're probably minimising their tax a fair bit anyway.

Main caveat - I'm not aware what percentage of excise revenue comes from large commercial vehicles (buses, trucks) - pushing all of this onto income tax might adversely affect individuals. There may need to be a component of revenue that comes from commercial vehicle registration or similar.

Those that would pay less under your proposal would include large companies that require company cars