Removing EV Taxes saves 26% increase
Michael Salvatico GAICD
Sustainability, Climate and Nature | Decarbonisation | Strategic Business Development | Strategy and Execution | Consulting
For many, the car is an iconic symbol of Australian culture identity. Many Australian's remain personally attached to a brand or model. For many it is more meaningful than a mode of transport, it is a status symbol.
It is funny how when I reflect on my childhood, some of the strongest memories are those of family debates over Holden and Ford motoring supremacy. In those days being a "petrol head" was a compliment, even if we agreed in secret.
However, the times have changed. One of those manufacturers, Holden, no longer exists. Surveys indicate the Australian population has moved on, well at least moved on from being petrol heads to desiring electric vehicles (see footnotes @). So why is the adoption of Electric Vehicles (EVs) so low?
Contributing to negligible adoption of EVs is Australia's lack of policy. The government has shown zero appetite to encourage EVs. This must change. At the Biden Climate Summit the Australian government strongly endorsed technology as the roadmap to a low carbon future. EVs are a low carbon technology.
A simple and widely appealing way to promote EVs would be to remove taxes. Removing taxes on EVs will significantly reduce the cost, one of the inhibitors of adoption. Taxes are a tool to encourage or discourage behaviour, leading to social and economic benefits. @@
I am not a tax accountant, but investigating the taxes on automobiles and some quick calculations indicates a 26% increase from taxes on a car that costs $80,000 before it hits our shores. That is $21,000 in combined taxes. Removing this tax is a huge opportunity to promote the uptake of EVs.
There are these taxes on cars:
- Custom Duty 5%
- GST 10%
- Luxury Tax 33% (EVs over $77,565)
- Stamp Duty (NSW >4% for $100,000)
Removing these taxes would lead to greater adoption of EVs. Australian needs to encourage climate action. EVs are symbol of the transition to a low carbon future. An opportunity for people to feel empowered; to demonstrate their climate action; to participate and contribute to Australia's low carbon future.
It is in the government's interest to promote Evs in order to acheive their 2030 forecast of EVs representing 26% of new car sales.
Greater adoption is required to rapidly transition our economy to a low carbon future. Replacing old cars on the road is an imperative as these tend to be less efficient and greater polluting.
The evidence is compelling:
- Australian car fleet is old: Average age of vehicles across Australia increased to 10.4 years. #
- EVs underrepresented : Less than 0.1% of cars in Australia are EVs. There were 19.8 million registered motor vehicles as at 31 January 2020. #
- Fleet of cars is growing: The national fleet increased by 1.5 per cent from 2019 to 2020. #
- Cars are a major source of greenhouse gas pollution in Australian cities. Transport is Australia's third largest source of greenhouse gas emissions (96MtCO2e per year, 17% of total emissions) (Australian Government 2017a) ^
- Older cars have greater emissions: The average national emissions intensity for new passenger vehicles in Australia was 250g/km.**
- Cars bought in Australia are more polluting: In 2018, the average carbon dioxide emissions intensity for new passenger and light commercial vehicles sold in Australia was 180.9g/km, 45% higher than in Europe. In 2019, that figure failed to improve, holding steady at 180.5g/km.18 *
Support for EVs is evident from the survey results of the Electric Vehicle Council:
- 68% of consumers want government subsidies to reduce the cost of buying an EV ++
- 56% of surveyed consumers would now consider purchasing an electric vehicle as their next car ++
There is broad support for EVs from voters, now the country needs government to step up and support the technology.
Footnotes:
@ https://australiainstitute.org.au/post/majority-of-australians-support-ev-policies-including-subsidies-for-new-car-purchases/ and https://www.theguardian.com/environment/2019/apr/12/poll-shows-50-per-cent-of-australians-support-shifting-all-sales-of-new-cars-to-electric-vehicles-by-2025
@@ Deficit Myth, Stephanie Kelton, "governments can use taxes to encourage or discourage certain behaviors".