Road User Charge for EVs: What Small Business Owners Need to Know
Australian Treasurer Jim Chalmers has identified a road user charge for electric vehicles (EVs) as a tax reform priority, raising expectations that it will be introduced should
Labor win a second term. This proposed charge is in response to declining fuel excise revenue, which currently funds road maintenance.
Why Does This Matter?
With 114,000 EVs sold in Australia in 2024, making up nearly 10% of new car sales, the government is facing a long-term decline in fuel excise revenue. The Parliamentary
Budget Office (PBO) warns that if this trend continues, alternative funding sources-such as higher personal income taxes or spending cuts-may be required.
What Could a Road User Charge Look Like?
Motoring groups argue that EV drivers should contribute to road costs, just as petrol and diesel vehicle owners do through fuel excise.
Some industry leaders are pushing for a universal per-kilometre charge for all vehicles, including petrol and heavy trucks, which cause the most road damage.
The NSW government has proposed a 2.5 cents per kilometre charge for EVs and a lower rate for hybrids, set to begin in 2027 or when EVs reach 30% of new car sales. A similar model could be adopted federally.
Political & Legal Hurdles
The Greens oppose the charge, and a previous Victorian road user tax was struck down by the High Court, ruling it an excise-a tax power reserved for the Commonwealth. As a result, any new scheme would require federal leadership and coordination with the states.
What's Next?
For small business owners, particularly those managing vehicle fleets or considering EV adoption, these changes could impact operating costs.
While details remain unclear, businesses should monitor developments, especially if a per-kilometre tax is introduced across all vehicle types.
As Treasurer Chalmers stated, "We need to pay for roads somehow." With EV adoption rising, a user-pays system seems inevitable-making now the time for businesses to prepare for potential cost changes.
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