Electric vehicle tax myth busted by new EY analysis28 September 2020
“These numbers prove that every driver who switches delivers a $1370 boost to government coffers, and a $8,763 boost to the Australian economy.”
The commonly held view that electric vehicles create a net hit to government coffers by avoiding fuel excise has been discredited by new analysis from EY, that shows every electric car replacing a combustion engine vehicle creates an average $1370 net government revenue benefit.
The new report, ‘Uncovering the hidden costs and benefits from electric vehicles’ shows every electric vehicle that replaces a combustion engine car delivers an $8,763 net benefit to the economy over a ten-year life span, including the $1370 benefit to government revenue.
The analysis shows the average Australian electric vehicle driver already pays more tax (spread across federal and state charges) than a combustion engine driver, despite obviously saving on fuel excise. In addition the electric vehicle driver makes a significant contribution to the economy through lowering pollution and boosting the population’s respiratory health.
Electric Vehicle Council chief executive Behyad Jafari said the analysis should put to bed the idea that electric vehicle owners leave a hole in government coffers and should be taxed more to compensate.
“You often hear this idea that when someone replaces their petrol engine vehicle with an electric car they reduce their tax, because they don’t pay the fuel excise anymore. This analysis blows that argument out of the water,” Mr Jafari said.
“These numbers prove that every driver who switches delivers a $1370 boost to government coffers, and a $8,763 boost to the Australian economy.
“Instead toying with the idea of punishing people for buying electric vehicles by charging them additional taxes, the rational thing for government to do would be pull out all stops to encourage transport electrification.
“If a quarter of Australia’s fleet was converted to electric it would generate an economic benefit of $4.4 billion a year.
“But slamming the brakes on electric vehicles, when they are capable of delivering so much economic benefit, would be extremely stupid policy.”
EY’s Asia Pacific Climate Change and Sustainability leader Dr Matthew Bell said the report should be an eye opener for lawmakers.
“Our analysis shows the significant value that electric vehicles can create for Australia, including to government,” Dr Bell said.
“What will be lost in fuel excise and GST revenue is more than made up for in savings on strategic fuel reserves leasing and the significant health and environmental benefits.”
“Climate change is having, and will continue to have, a transformative impact on all Australians. Our analysis shows that the move toward electric vehicles creates a benefit over and above the reductions in greenhouse gas emissions.”
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