EV tax zapped: High Court bins Victoria's electric car tax, could prevent other states imposing a tax

The High Court of Australia has ruled Victoria's electric car tax, introduced in mid-2021, is unconstitutional in a decision that could prevent other states from implementing their own distance-based electric car taxes.

The tax was challenged by Victorian EV owners Chris Vanderstock and Kathleen Davies in September 2021, who argued Victoria doesn't hold the power required to charge drivers for electric vehicle road use.

The High Court found that the tax imposed by Victoria is an excise which can only be charged by the commonwealth, rather than a tax on activity which Victoria is entitled to charge.

"The three factors on which Victoria relies do not, individually or cumulatively, support its characterisation of the ZLEV charge as nothing more than a tax on the activity of driving a ZLEV on specified roads," reads a section of the case document released by the High Court.

Senior Associate at Equity Generation Lawyers David Hertzberg, who represented Mr Vanderstock and Ms Davies, called the ruling a "landmark constitutional decision".

"Today's judgment means that Victoria's electric vehicle tax is invalid. It also sets a precedent which will likely prevent other States from implementing similar legislation."

Mr Vanderstock, one of the plaintiffs, called it a "great outcome not only for Victorian electric vehicle drivers, but for all Australians".

"We believe that Victoria's electric vehicle tax discouraged people from buying EVs, and punished existing EV owners who are trying to do the right thing.

"It was an ad hoc, piecemeal policy which undermined our collective efforts to reduce emissions from transport."

While the other states of Australia backed Victoria in the case, the ruling now means they'll likely be unable to impose similar taxes in future.

Chief Executive of the Electric Vehicle Council Behyad Jafari said road user charges aren't the issue, until they're "calibrated to discourage the take up of electric vehicles".

"The electric vehicle industry warned the Victorian Government this policy was muddleheaded years ago, and the offer has always been on the table to work with the state on a more sensible approach.

"Australia's priority should be on boosting the transition to EVs and decarbonising our transport system. There is no need for Australia to be dependent on imported oil today.

"Road funding is also an important consideration for government, but we should approach issues in the right order.

"Allowing states to simply shake down EV owners for a bit of extra tax is a retrograde approach, and I'm very glad to see the High Court slamming the brakes on that today."

Victoria has been compelled to pay for the proceedings of the case.