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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!

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