High Court rejects Victoria tax on EVs
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The High Court has rejected the Victoriangovernment’s tax on electric vehicles as invalid, ruling that only theCommonwealth has the power to make such laws.
The court ruled by a 4-3 majority thatthe Zero and Low Emission Vehicle (ZLEV) Distance-based Charge Act 2021 was an“inland tax on goods” that fitted the definition of an excise under section 90of the constitution,
The case was brought by two EV carowners, nursing manager Chris Vanderstock and engineering consultant Kath Davies, who have called the Act “the world’s worst EV policy” and “a roadblock to reducing emissions” and getting better air quality.
The Act required the two owners toprovide an odometer reading 14 days after it began on July 1, 2021. The chargewas 2.5¢ a kilometre on specified roads for an electric vehicle (which MrVanderstock owned) and 2¢ for a plug-in hybrid electric vehicle (as owned by MsDavies). The charges rose 0.1¢ per kilometre for financial year 2023.
The tax affects about 15,000 carowners and has been closely watched for its impact on how EVs are taxed and what level of government can collect revenue from their use.
Victoria and the other states argued that it was a tax on an activity and therefore did not come within section 90. If they had succeeded, it would have given the green light for other states to implement similar legislation to ensure all vehicle owners contributed to road construction and maintenance.
The High Court said in a statementthat the question of whether it was a tax on goods turned “on whether, first,the tax bears a close relation to the production or manufacture, sale,distribution, or consumption of goods, and, second, whether the tax is of sucha nature as to affect the goods as the subjects of manufacture or production oras articles of commerce”.
“The ZLEV charge is a tax on goodsbecause there is a close relation between the tax and the use of ZLEVs, and thetax affects ZLEVs as articles of commerce, including because of its tendency toaffect demand for ZLEVs.”
‘Departed from precedent’
The majority comprised Chief Justice SusanKiefel, Justice Stephen Gageler and Jacqueline Gleeson – who combined in ajoint judgment – and Justice Jayne Jagot.
One of the dissenters, Justice JamesEdelman, said the decision court had departed from precedent.
“The extension of the essential meaningof an excise to a tax that has a reasonably anticipated economic effect on thepattern of demand, as was sought by the plaintiffs and the Commonwealth,involves a neglect of precedent.”
Justice Edelman listed 20 previousmembers of the High Court who had come to a different view, and said they werenow regarded as “wrong”.
(20min delay)