High Court rules Victoria’s “World’s Worst” EV Tax Unconstitutional

The High Court has ruled Victoria’s EV tax unconstitutional in a stunning rebuke of the Victorian Government’s decision to tax users of low or zero emission vehicles. The state government is now set to decide what to do with the ZLEV road-user charge.

The Court ruled that the ZLEV road-user charge is a clear tax on the use of an EV, which can only be imposed by the federal government, falling within the ambit of Section 90 of the Australian Constitution which says only the Commonwealth can imposes taxes on Australians. It said Victoria’s interpretation of the Constitution was wrong and that it did not have the power to tax Victorians.

The ZLEV road-user charge taxes electric and hydrogen vehicle owners 2.8c for each kilometre they travel during the year, and plug-in hybrid vehicle owners 2.3c for each kilometre. Hybrid vehicles are exempt.

Owners are required to submit photographs of their vehicle odometer to the state government each year. If they fail to do so, their registration can then be suspended and cancelled.

The landmark was brought by electric vehicle owner Chris Vanderstock and engineering consultant Kathleen Davies, who argued the states did have the right to impose this tax.

Their lawyer David Hertzberg called the ruling a landmark constitutional decision: “Today’s judgment means that Victoria’s electric vehicle tax is invalid. It also sets a precedent which will likely prevent other States from implementing similar legislation,” he says.

The federal government backed Vanderstock and Davies’ contention that section 90 of the Constitution says that only the federal government can impose customs, excise and bounties, such as GST.

Often named the “world’s worst EV policy,” Victoria’s ZLEV road-user charge started in July 2021 with a charge of 2.5c/km for battery electric vehicles, and 2.0c/km for plug-in hybrids. The charges were increased this year to 2.8c/km for battery EVs.

Time will only tell what the Victorian Government will do regarding the decision, with Vicroads saying it will provide guidance shortly. Whether this means any of the charges paid to date get refunded remains to be seen, but we remain hopeful Vicroads will do the right thing by reversing any ZLEV road-user charge taxes it collected and abolish the tax for good.