Charge road users to compensate for electric cars, urges AAA

The Australian Automobile Association (AAA) is calling on the government to start replacing fuel excise with a road-user charge.

The reason for the AAA’s call to action, according to the Australian Financial Review, is simple: electric cars.

AAA Chief Executive Michael Bradley says applying a road-user charge would compensate for the fuel excise these drivers don’t pay.

“Ultra-low fuel consumption vehicles currently enjoy an effective road-use subsidy equivalent to the fuel excise rate,” he said.

Unpopular issue

Mr Bradley also implied political leaders lack the courage to confront the issue, fearing a public backlash. But sooner or later, he suggested, they would have to act because of the “inequity” of fuel excise.

“The federal government will this year collect $12.6 billion in fuel excise from motorists,” he said. “Drivers of different cars pay different prices to use the same road, with the economically underprivileged usually hit hardest.

“However, car-industry observers are pointing to an even bigger problem for the government to solve. Volvo last year announced that 50 per cent of sales will be fully electric by 2025. Volkswagen has said it will sell one million electric vehicles by 2025.

“While predictions regarding the timing of mass take-up of the internal combustion engine’s replacement vary considerably, the consensus regarding this technology’s impending arrival is as clear as the need for a structural adjustment to the way we all pay for road access.”

A newer model

Mr Bradley says a range of bodies have already recommended a transition from a fuel-excise to a road-user charging model. These include the Harper Review, the Henry Tax Review and Infrastructure Australia.

To make the transition more palatable to consumers, he recommended itemising the excise component of fuel (currently 41.2¢ per litre) on receipts.

“In a country where too few people are aware they even pay the invisible excise, the task of selling what will inevitably be seen as a ‘new’ tax on mobility, has proven too hard,” he said.

He also recommended that half of excise and road-user charge revenue go towards a dedicated fund for roads.

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