Victoria's administration of EV road tax “unreasonable and wrong”

Victorians who drive electric and plug-in hybrid vehicles are being slugged with unfair charges under a tax scheme the Greens say has been a “dog’s breakfast” from the start.

The Victorian government in 2021 introduced the Australian-first zero and low emission vehicle charge in a bid to level the playing field for drivers given those with the greener cars paid nothing or little towards maintaining the state’s roads, whereas the owners of internal combustion vehicles pay fuel excise when they purchase fuel at the pump.

Victorian Ombudsman Deborah Glass has fielded more than 30 complaints about Victoria's scheme.

In an investigative report tabled in parliament, the ombudsman suggested the Department of Transport and Planning "acted in a manner that was unreasonable", and treated drivers under the scheme with a blanket approach, failing to exercise discretion when it should have.

The ombudsman pointed to one hybrid plug-in driver who travelled thousands of kilometres in remote Australia using only fuel because there were no charging stations.

Despite the driver paying the fuel excise that the electric vehicle tax was meant to make up for, the department still hit them with a bill for hundreds of dollars under the zero and low emission vehicle charge.

“We found an unreasonable lack of policy guidance to those administering the legislation, inflexible handling of complaints, and an unwillingness to exercise discretion,” Ms Glass said.

“It is also wrong to charge penalties not provided for in legislation, and the money collected under this ‘penalty’ should be repaid.”

The ombudsman said many of the complaints she received related to drivers who believed their charges were unreasonable, while others came from drivers who submitted their odometer declarations late.

Drivers of electric and plug-in hybrid vehicles generally had to show proof of the kilometres they travelled in each registration period, Ms Glass said.

In one case, a driver submitted their odometer reading late because they were overseas and the department went ahead and cancelled their registration.

In other cases, drivers whose odometer declarations were overdue had their kilometres estimated based on a Victoria-wide average, and the ultimate kilometre readings exceeded the entire distance their car had travelled.

The department initially refused to amend the bills for five drivers in that situation and described the blown-out charge as a penalty, the ombudsman said.

Victorian Greens deputy leader Ellen Sandell said implementation of the tax scheme has been a mess.

“This report makes clear that Labor’s tax on people who drive electric cars has been a dog’s breakfast from the start,” Ms Sandell said, adding that it shows “people have been double-charged, overcharged, and the implementation has been a shambles”.

“We should be helping people make the switch to electric cars by making them more affordable, instead of making them more expensive.”

The constitutional validity of the legislation behind Victoria's tax scheme is currently being challenged in the High Court by two electric and hybrid vehicle owners, and the outcome of that case will determine how electric and hybrid vehicles are taxed in Australia.

The crux of the case is whether the Victorian tax is an excise or not. Under the constitution only the Commonwealth can impose an excise.

"The fuel excise is levied by the federal government, not the states, so there's no shortfall as far as Victoria is concerned," the plaintiffs lawyer, David Hertzberg, told the ABC. "This tax is just a cash grab."

However, the Victorian Ombudsman said that "whether or not its validity is successfully challenged, [by the High Court, Victoria's] legislation is being administered unfairly. This needs to change."

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A previous version of this article was first published on The Driven. You can read it here.