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Electric Vehicles: What Will Happen With The Fuel Taxes?

I think we all know by now that electric cars and hybrids are much more common on the roads than they used to be.  It’s 20 years since the original Toyota Prius  – the groundbreaking first hybrid vehicle – hit the roads, which means that if you’ve got your eyes open, you can score a second-hand hybrid.  They’re getting better and better with extended range and more body types coming with hybrid and even all-electric versions.

One of the reasons put forward for why you should switch to an electric or hybrid vehicle – and you hear this one more often with pure electrics – is that electricity is cheaper than petrol or diesel, so it’s cheaper to fill up.  You’re not paying all that tax.

Ah yes – the tax.  Can anyone else spot the potential problem here?  What will happen if a large proportion of us switched to purely electric vehicles?  This means that one particular source of government income is going to drop dramatically.  Can we see the government smiling happily about this and how we’re polluting so much less, etc. and just carrying on without the tax coming from fuel?  Maybe they could take a cut in their salaries or spend less on frivolous projects and fancy-pants conferences.  Ooh look – a flying pig.  Better get out your manure-proof umbrella.

OK, if we take a less cynical view and make the charitable assumption that the fuel taxes get used to keep the roads in good order.  If we don’t want our roads to deteriorate if loads of people switch to electric vehicles, that money has got to come from somewhere.  But where?  What are the options?

The first option would be to hike up the fuel tax to cover the shortfall.  There are two problems with this one.  The first is that even though there are some second-hand hybrids knocking about and even though we do our best here at Private Fleet to get you the best deals on a new car, pure electric vehicles still tend to be at the newer end of the spectrum and are beyond the budget of a low-income family (especially if said family needs a larger vehicle than the little hatchbacks that early examples of hybrids tended to be).  This leads to a vicious cycle: they can’t afford to upgrade to an electric with the higher petrol prices, which means they have to keep on using the expensive fuel, etc. or switch to using public transport if they live in towns.

The other people who will get hit hard by this hypothetical hike in fuel taxes are those in rural communities.  Although range of electrics is getting better, it’s not quite where it needs to be for those out the back of beyond: the park rangers, the tour guides in the Outback and the district nurses and midwives.  Going electric isn’t really an option for them – and the sort of vehicles needed by your park rangers and tour guides (i.e. big 4 x4s) don’t usually come in electric (although that’s starting to change).  What’s more, the big rigs and farm tractors don’t come in electric versions either (electric tractors exist but they’re puny), so they’ll keep on needing diesel.  This means that their costs will go up with a hypothetical fuel tax hike, which probably means that farmers and trucking companies will go out of business or else they’ll pass the costs along and we’ll all have higher food prices.  It’s like the old army wisdom about not pissing off the person who cooks: you don’t ever brush off the farming community as unimportant, because they are the ones who produce your food and most of us like to eat.

OK, so the knock-on consequences to rural communities and a lot of Australia’s industries would throw our economy into chaos (just think of all the diesel-powered machines involved in the mining industry, for example – although there are some rugged electric utes that have been specifically designed for the mining industry).  The Powers That Be hopefully aren’t that stupid and they are more likely to find a fairer way of getting the tax money than simply increasing the existing tax.  What’s much more likely is that they’ll create a new tax.  Any guesses as to what that new tax is likely to be?  It doesn’t take a genius to figure out that if people are using electricity instead of using petrol and diesel and thus avoiding the fuel tax, the obvious thing to slap a tax on is the electricity…

You read it here first, folks.  Although at the moment, using electric vehicles will save you at the plug (rather than the pump), it’s only going to be a matter of time until a tax appears, especially as electric vehicles become more common.  Yes, there are other advantages to using electric vehicles such as the reduced pollution and how they don’t depend on a finite resource (biofuels aside), but the advantage of not paying a fuel tax won’t last forever.

Enjoy it while you can!

7 comments

  1. Gordon says:

    Battery cars are at least 10 years away as battery technology has not caught up to Solar.

    In smaller European countries induction charging may be a solution but in countries like Australia is not viable.

    For all those greenies that think batteries will remove pollution think again as the manufacture and disposal of batteries produce more pollution than fuel.

    Batteries that are coming will be like Nuclear when it comes to end of life no one will know what to do or how to dispose of them.
    The present battery car have a distance of about 300 K before they need charging which will take about 5 hours at least therefore to travel from Brisbane to Rockhampton will take a few days.

    Yes the supply Authorities are working on installing charge station along highways but charge times will still be the same.

    Quick charging is coming but will be at 1000s of Volts

    I can remember when it took two day to go from Sydney to Newcastle return now can do in less than one day.

    Solar system in Australia for solar Farms is 5 hours a day in NSW and Victoria and 8 hours for Queensland.

    Therefore if you operate for 8 hours a day a sleep without Air conditioning for 16 hours and travel during the day for the same time no problem. as for those who live south bad luck

    September 25th, 2018 at 2:49 pm

  2. jerry dolan says:

    Why is everyone missing out on hydrogen through fuel cells for the electricity. Double the range of batteries and water is the only emission. California, Japan, Germany, UK have all got them why not here
    Regards
    Jerry Dolan

    September 25th, 2018 at 5:24 pm

  3. Trefvor Masters says:

    If the government can afford to forgive $80B tax for the banks then they can pay for the roads that are used by just about everyone not just pander to the big end of town.

    September 25th, 2018 at 8:33 pm

  4. David Williams says:

    Why tax the electricity? Just increase the Road Tax/Rego for the electric vehicle to make up the missing fuel excise & GST.

    Regards
    David

    September 25th, 2018 at 8:53 pm

  5. Jason says:

    Please put this into perspective. Currently there are about 8,000 pure electric vehicles registered in Australia. We purchase about 1 million vehicles per year. This is akin to scare mongering at this early stage, and be prepared as world wide there is a massive transition to electric vehicles.
    Fuel tax is used for roads, but other taxes are used for health. Just changing to emission free vehicles is estimated to improve health, so money spent on health will not be as required and can be diverted to roads. That’s a long way in the future because 8,000 electric vehicles is not going to make much of a difference, it is when 800,000 vehicles are electric that we will see the difference.
    Electricity can 100% be produced in Australia, oil is sourced (and importantly regulated) from overseas. All those wars we have spent $bil’s on over the past couple decades have all been fought to secure our oil supply. The Middle East will most likely always be a conflicted region, but take away our need for their oil and you take away our need to be part of that conflict. Savings on military budget can be used for roads.
    Government should be about working out what’s better, what the trends are, and making decisions to help Australia get those solutions. Unfortunately it seems to be about in fighting and lining their own pockets. Short sighted politicians caused loss of our car manufacturing, was that a good outcome? Now short sighted politics is trying to scare monger the delay in renewables every and electric cars. I think history will look back at this society and judge it very selfish, short sighted and in a poor light.
    Oh, by the way, one trend happening right now is the move to home generated (and stored) power. Have fun with that when the government taxes it because they are losing revenue from the sales of electricity and gas. Disruptive technology will cause all sorts of changes, we are currently right in the middle of such a change, how we handle it to the betterment of society is up to us.

    September 26th, 2018 at 6:39 am

  6. steve says:

    Re your comments Gordon – do some more recent reading from Nissan, Audi, Jag and VW sites. Rapid charging to 80% is possible within an hour. Range varies greatly – up to over 400 klm and will only increase with battery technology. Our government will not want to see high taxes disappear with petrol cars, but the rest of the world will drag us along as well. 5 years will see the increase in EV market share and home charging will also increase, so just as coal fired power is being replaced via renewables, so to will EVs replace petrol. And as with all technologies, the uptake and progress is nearly always under estimated.

    September 26th, 2018 at 11:19 am

  7. Barry Elfverson says:

    It is interesting to read all the pros and cons of converting to electric cars, but nowhere do I ever see any comments regarding the costs associated with recharging these vehicles. If these vehicles cover say 400km per recharge and the average annual driving is 15-20,000km, then that e

    September 29th, 2018 at 12:09 pm