Impending Tax for Australian Motorists: Senior Ministers Advocate for Significant Shift in the Country's Road Network
In the midst of a growing shift towards electric vehicles (EVs), the Australian government is actively examining the implementation of a national road user charge for EVs to sustain funding for road infrastructure. This proposed charge, which would be based on distance traveled and possibly vehicle type, is aimed at addressing the decline in fuel excise revenue that currently funds road maintenance.
The federal government, led by Treasurer Jim Chalmers, is working in collaboration with state and territory governments and industry stakeholders to develop a fair and universally applicable scheme. This universal road-user charge would apply to all light vehicles, regardless of fuel type, to ensure fairness and consider emissions intensity.
The idea of a road user charge for EV drivers has been floated as a means to ensure money is set aside for road upkeep as more drivers switch from fuel-taxed petrol/diesel vehicles to EVs, which do not pay fuel excise.
However, state-based EV taxes, such as the one proposed in Victoria in 2023, were ruled unconstitutional by the High Court, centralizing responsibility for implementing such a charge to the Commonwealth.
As of mid-2025, it is expected that a road user charge for EVs may be introduced once electric vehicles reach about 30% of new vehicle sales, potentially from 2027. This timing is partly motivated by the need to ensure significant EV adoption before implementing the charge.
Frontbencher Tanya Plibersek supports the idea of a road tax for EV users, stating it is sensible for the states and territories to look long-term at funding for road maintenance. Plibersek notes that as the number of petrol and diesel vehicles decreases, the tax from fuel excise also decreases, potentially reducing funds for road building and maintenance.
Plibersek also highlighted that the states and territories have been discussing this issue for some time. However, she clarified that nothing is happening immediately regarding the implementation of a road tax for EV users, but it is sensible to consider it for long-term funding of road maintenance.
The federal government's productivity roundtable is scheduled for next week, where the future of road-user charging for EVs is expected to be a key topic of discussion.
In other countries, many are also grappling with how to tax EVs fairly to replace fuel taxes. Schemes range from mileage-based user fees to flat EV registration levies. Australia is notable for the legal challenge to state-based EV levies, pushing its policy discussion to the federal level.
In conclusion, Australia is planning a federal road user charge for electric vehicles based on distance traveled to replace lost fuel excise revenue, targeting implementation aligned with rising EV adoption, but the exact framework is still under development as of August 2025.
- As Australia explores a federal road user charge for electric vehicles, Treasurer Jim Chalmers, along with state and territory governments and industry stakeholders, are collaborating to develop a universally applicable scheme that applies to all light vehicles, regardless of fuel type, to ensure fairness and consider emissions intensity.
- In an effort to address the decline in fuel excise revenue due to the growing shift towards electric vehicles, frontbencher Tanya Plibersek supports the idea of a road tax for EV users, stating that it is sensible for the states and territories to look long-term at funding for road maintenance, given the potential reduction in funds from fuel taxes as the number of petrol and diesel vehicles decreases.
