It is the David and Goliath battle of the EV industry in Australia — if David was secretly backed by a giant twice the size of Goliath — and all eyes are on the High Court as the constitutional stoush unfolds this week.
EV drivers Christopher Vanderstock and Kathleen Davies, supported by the Commonwealth, are taking on the Victorian government about an EV road tax for kilometres travelled that they say is “unconstitutional”.
But in the Victorian government’s corner is every fellow state and territory jurisdiction in the country, with the chorus arguing that level of government has the right to impose the Zero and Low Emission Vehicle Distance-based Charge Act (ZLEV).
The ZLEV charge, which was introduced in July of last year, is 2.6 cents for electric and hydrogen vehicles (plug-in hybrid owners pay 2.1 cents per kilometre travelled) to be declared at the end of a registration period.
In considering the high stakes case, the High Court must decide two things: is a tax on the consumption of goods a tax “upon goods”? And if it is, does this ZLEV charge count as one?
“An excise is in essence a tax on some step taken in dealing with goods,” the Commonwealth submissions argued.
“The tax … is calculated by reference to the quantity of the consumer’s usage of a ZLEV. It imposes an excise.”
But the Victorian government countered the ZLEV is not an excise, which only the Commonwealth has the constitutional power to administer and collect on.
The state’s lawyers will argue the levy is not charged during the production process, or at the point of sale, but rather a long time afterwards (at rego time).
“A charge of this kind, imposed periodically after the point of sale and incurred only if a person engages in a specific activity involving use of the good, bears no resemblance to any charge previously considered by this Court to be a tax on goods, let alone an excise,” the state government’s submission reads.
Its counterparts agree. The Queensland government’s submission called it a “direct and personal tax” while WA declared it a “usage consumption tax” — though it is in both’s interest for such a tax to be collected at the state government level.
“Whatever its outer limits, an excise must at least be a tax on ‘goods’,” the Northern Territory’s submission added.
Marque Lawyers’ principal Michael Bradley told SmartCompany in November that the EV industry will be watching the case extremely closely in the hope it succeeds and the Victorian levy is declared unconstitutional.
“The combination of a hotch-potch of state-based laws and the states’ perennial desire to grab cash wherever they can without much regard for the national economic impact would be a nightmare,” he said.
“The transition to EVs would be far better managed at the federal level so at least it’s consistent and other considerations — environmental and economic — are also taken into account, not just revenue.”
But Bradley says it’s anyone’s guess which way the High Court will go on Section 90, which gives the Commonwealth Parliament exclusive power to impose excise duties (taxes on goods).
“Section 90 is very difficult to understand, let alone apply,” Bradley said.
Emma Elsworthy is Climate Editor at The Mandarin.
