The NSW Government took its first steps towards a distance-based road-usage fee for all motor vehicles as it rolled out plans to begin charging drivers of electric vehicles and plug-in hybrids a per-kilometre fee from 2027.
Ahead of this week’s 2021-2022 budget, the NSW Government unveiled via Sunday newspapers a $490 million plan that includes substantial taxpayer-funded incentives to buyers of electric vehicles, as well as the eventual introduction a per-kilometre road usage fee for electric and plug-in hybrid cars.
From 1 September 2021 buyers of electric cars in NSW will receive a taxpayer-funded discount of $3000 on vehicles priced up to $68,750 – while all electric cars priced up to $78,000 will be exempt from stamp duty, saving up to $3000 off the purchase price.
In NSW, the stamp duty saving amounts to 3 per cent of every dollar up to $45,000 ($1350) and 5 per cent of every dollar between $45,000 and $78,000 ($1650).
The taxpayer-funded incentives are designed to offset a new per kilometre charge for electric and plug-in hybrid vehicles in lieu of fuel excise, a large portion of which goes into road funding.
The 2.5 cents per kilometre charge for electric cars and 2 cents per kilometre fee for plug-in hybrids to be introduced in NSW in six years are the same charges set to be introduced by the Victorian government from next month (1 July 2021).
The NSW Government has taken a slower approach to distance-based charging of electric and plug-in hybrid cars, claiming the fees will come into force by 2027 or once electric vehicles make up 30 per cent of new-car sales, whichever comes first.
However, as with the Victorian Government, the NSW policy does not address why plug-in hybrid cars – which typically can only drive up to 50km on electric power before automatically switching to a petrol engine – must pay twice: fuel excise at the bowser as well as a per-kilometre charge.
At present, there is no technology available that would enable government authorities to distinguish when a plug-in hybrid was driven on electric versus petrol power, to charge such vehicles more fairly.
According to data compiled by the Federal Chamber of Automotive Industries, purely electric cars last year account for less than 1 per cent of new vehicle sales, not including Tesla which does not provide data.
As part of the 2021-2022 state budget, the NSW Government says it plans to spend $490 to “cut taxes, incentivise uptake, and reduce barriers for electric vehicle purchases over the next four years”.
In a media statement the NSW Treasurer Dominic Perrottet said the combination of tax incentives and road user charges are “about making sure we have the right mix in place to incentivise the take-up of electric vehicles while ensuring everyone who drives on our roads contributes to funding and maintaining them.”
While supporters of electric cars have roundly criticised distance-based charging proposals, transport experts believe such fees will eventually be applied to all motor vehicles.
“Today we begin the process of permanently phasing out stamp duty on electric vehicles and a deferred transition to a fair and sustainable per-kilometre road user charge for electric vehicles,” Mr Perrottet said in a media statement.
The NSW Government touted the discounts as a win for new-car buyers on a budget.
However, the cheapest electric car currently on sale in Australia is priced from $43,990 drive-away, there are a few options in the $50,000 to $65,000 drive-away price range, and the most popular electric car sold locally (a Tesla) starts from $70,000 – all of which are out of reach of most buyers.
The average cost of all new cars sold in Australia is $35,000; an electric car is yet to limbo to that threshold.
Despite the relative high prices for electric cars, the NSW Government claimed the incentives were a win for the masses.
“From young adults saving for their first car in Western Sydney to retirees planning a road trip to Broken Hill, these incentives will make electric vehicles accessible and affordable for all NSW residents,” Mr Perrottet’s media statement continued.
The Minister for Transport and Roads Andrew Constance said the policies were designed to give the car industry “the green light to increase model availability and cut entry price points”, adding that, by the government’s calculations, “the average NSW driver will save around $1000 a year in running costs by switching to an (electric car), and those savings can be up to $7500 a year for businesses, taxis, and freight.”
The NSW Government said the $490 million in funding and tax cuts includes includes $171 million for new charging infrastructure across the state (including $131 million on fast chargers) $20 million for charging points to assist regional tourism, and $20 million for charging infrastructure at public transport hubs.
A further $33 million will be used to “help transition the NSW Government passenger fleet to (electric cars) where feasible, with the target of a fully electric fleet by 2030.”
Given that government fleet vehicles are typically sold as used cars after three to five years, this would provide a steady supply of affordable used examples, the government claimed.
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