5 thoughts on “It’s good the High Court overturned Victoria’s questionable EV tax. But there’s a sting in the tail”

  1. There has always been confusion about the fuel excise. Is it a user pays tax to capture congestion, road maintenance, pollution and traffic accident externalities or is it a revenue-raising device that efficiently raises revenue from fuels that are in fairly inelastic demand? In our work for the Henry Tax Review we noted many arguments from both the revenue-gathering and externality reasons for extending such taxes to EVs. In most cases there are no pollution or road maintenance externalities so ideally the taxes should be lower on EVs from the externality perspective but they still cause congestion and traffic accident externalities and these are linked to both distance travelled and the location of travel. If you choose not to levy such charges then you are implicitly subsidising EVs. That is a reasonable argument but it needs to be made.

  2. So, just to see if I understand – prior to the tax that the court eliminated, EV drivers were paying nothing at all to support road maintenance? Or just “less,” somehow? (“Nothing” does not seem quite fair to me either, ditto Harry Clarke. Thousands of years ago, I worked on a road crew. It’s hard work!)

    In California, the state gov is deep in the thicket of applying these ideas to our electric utilities, many of which seem to be investor-owned. It’s kind of a mess. Have I followed the math closely? No! Am I upset that they seem to have bleeped residential solar? You betcha!

    It seems like they could have just come up with what the fixed cost charges for the transmission lines would be, and just told us what they were, first – before moving everyone’s cheese! Cheese-moving is also inefficient, imho.

  4. N – When EV’s make up a significant portion of road users they will need to pay their share of road costs. But because the transition to EV’s is important but still expensive – based on the advice on climate, it is essential and urgent – it is important to include incentives for them – and/or disincentives for ICE, which have significant unaccounted costs.

    Seems reasonable to exempt EV’s for a time as one kind of incentive, but it can’t be an exemption in perpetuity. Not a big fan of tying revenues to specific expenditures, especially where it involves pork barreling; if it is important enough it needs funding regardless but selling taxes to the public is so contested that I see why it becomes politically necessary.

    On the other hand the disincentives for fossil fuel vehicles DO need to be forever, including ramping them up over time. Enthusiasts will have to use biofuels or pay for genuine negative emissions to keep using petroleum fuels.

  5. Re this: “Not a big fan of tying revenues to specific expenditures, especially where it involves pork barreling; if it is important enough it needs funding regardless but selling taxes to the public is so contested that I see why it becomes politically necessary.”

    I think I agree – but I am so used to being in this fairly odd system that I’m in, that it’s hard to imagine how a straightforward way of financing government would work. I wonder what the best mix is. Somebody somewhere must know that (it’s not me!) It’s probably someone in Scandinavia. Maybe I’ll google it! Trust being a part of not kludging oneself into a stupor, I think. Too late here.

    I used to think I was reasonably intelligent. But then I had to deal with car insurance. Oh well!

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