The High Court of Australia has ruled against the Victorian Government’s electric vehicle tax, legislated under section 7(1) of the Zero and Low Emission Vehicle Distance-based Charge Act 2021 (the ZLEV Charge Act). The tax necessitates registered operators of zero or low emission vehicles to pay a charge for using the ZLEV on specified roads.
The lawsuit was initiated by two Victorian drivers, Chris Vanderstock and Kathleen Davies. Their legal challenge was premised on the argument that the ZLEV Charge Act’s section s 7(1) imposed a duty of excise under the terms of section 90 of Australia’s Constitution, therefore rendering it constitutionally invalid.
Interestingly, the High Court opted to overturn its own precedent established in the Dickenson’s Arcade Pty Ltd v. Tasmania case, where the majority ruling opined that a tax on the consumption of goods did not constitute a duty of excise. This move towards reversing established precedents led to criticism from Justices Michelle Gordon, James Edelman, and Simon Steward, who considered this decision a departure from long-standing principles and authority.
Victorian Treasurer Tim Pallas described the ZLEV Charge as a fair means to ensure everyone pays their share of the cost to the road network. However, this sentiment was not shared by Davies who considered the tax unfair and criticized it as just a cash grab.
The ZLEV charge imposed an annual tax on users, set at a specified rate per travelled kilometre during a financial year. For the 2021-2022 financial year, electric or hydrogen vehicles were charged at a rate of 2.5 cents per kilometre, and plug-in hybrid electric vehicles were charged 2 cents. Non-plug-in Hybrid vehicles were exempt from the charge. Motor vehicle owners had to submit annual photographs of their odometer to the Victorian State Government. The failure to comply could lead to a default distance charge or even to a cancellation or suspension of their vehicle registration.
The ZLEV Charge has not been without its supporters, with Victorian Greens Upper House Member for Parliament, Katherine Copsey, referring to the High Court’s decision as a win for climate and green transport.
The ZLEV Charge generated $3.9 million Australian dollars in the previous financial year, illustrating the financial implications of this court ruling.