Victorian Parliament Introduces Zero and Low Emission Vehicle Distance-based Charge Bill 2021

Thursday 25 March 2021 @ 8.48 a.m. | Taxation | Trade & Commerce

The Zero and Low Emission Vehicle Distance-based Charge Bill 2021 (Vic) ("the Bill") was introduced into the Victorian Parliament by Treasurer Tim Pallas (the Treasurer) on 17 March 2021.  The Bill reached second reading stage on 18 March 2021. The purpose of the Bill is to require registered operators of zero and low emission vehicles ("ZLEVs") to pay a charge for the use of vehicles on certain roads ("ZLEV charge"). The Bill is proposed to come into operation on 1 July 2021.

Overview of Bill

This Bill would introduce a distance-based charge on the use of roads for Victorian registered ZLEVs, with charges to apply to vehicles not predominantly powered by a fuel source that is subject to a Commonwealth Government fuel excise, such as petrol, diesel or LPG. Under the Bill, from its commencement, a 2.5 cent/km charge will apply to electric and other zero emission light vehicles, including hydrogen vehicles, and a 2.0 cent/km charge will apply to plug-in hybrid electric light vehicles. Conventional hybrid light vehicles, which are predominantly powered by a petrol or diesel internal combustion engine, will not need to pay the new distanced based charge.

Like the fuel excise, a per-kilometre charge ensures vehicle owners who use the roads less pay less in distance-based charges. It is calculated that on average, electric vehicle (EV) owners will pay an additional $330 per annum and plug-in hybrid electric vehicles (PHEV) owners will pay an additional $260 per annum. The calculation is based on the average distance travelled for light passenger vehicles of around 13,100 km per annum. In his second reading speech the Treasurer said:

"These new distance-based charging arrangements and other financial incentives recognise the environmental and health benefits of ZLEVs. Under the distance-based charge for ZLEVs registered in Victoria, ZLEV owners will continue to pay less in road-related taxes and charges than other drivers—around 40 to 50 per cent less than the per kilometre equivalent that an average driver pays in fuel excise."

The Treasurer also indicated that existing incentives to promote the take-up of ZLEVs would continue in Victoria.  For example, the motor vehicle stamp duty concession for all low emission passenger vehicles which produce 120 grams or less of carbon dioxide equivalent emissions per kilometre travelled which was announced in the 2019–20 Budget. 

According to the Treasurer, the Victorian Government:

". . . anticipates the introduction of the distance-based charge will have a negligible impact on electric vehicle uptake in Victoria, particularly as the Government is investing the revenue raised from the first few years of the distance-based charge in vehicle-charging infrastructure that will help address a significant barrier to ZLEV uptake."

Part 2 of the Bill would implement the ZLEV distance-based charge.  It would make provision for owners of ZLEVs subject to the distance-based charge, requiring them to report their odometer readings to the Secretary of the Department of  Transport (Secretary). Owners of ZLEVs would then be invoiced in arrears based on the distance travelled during the declaration period.

ZLEVs owners can also make the necessary declarations to allow the Secretary to calculate the charge when they pay their vehicle registration using the "myVicRoads online portal" to generate an invoice based on the reported odometer readings. As with vehicle registration, registered owners of ZLEVs can pay the distance-based charge quarterly, semi-annually or annually as needed.

Part 3 of the Bill aims to provide strong incentives to ensure compliance with reporting requirements. The Bill would allow the Secretary to suspend or cancel a vehicle’s registration following failure to adhere to reporting requirements or for failure to pay distance-based charges. The Bill would also allow for penalty interest rates to also be charged by the Secretary on the late payment of distance-based charges.

The Bill would require ZLEV owners to retain records to substantiate their declarations for five years and provide evidence of their claims upon request to ensure compliance with the scheme. Vehicles may also be subject to inspection by officers authorised by the Secretary. The Bill would establish new criminal offences for registered operators who fail to keep records, fail to comply with a notice to inspect a vehicle subject to distance-based charges or knowingly or recklessly provide false or misleading information as part of a declaration to the Secretary.

Other Legislation Relevant to the Bill

In his second reading speech the Treasurer outlined measures apart from the Bill would be introduced to "refocus financial incentives on the most environmentally friendly vehicles". He indicated that the Minister for Roads and Road Safety will be making these changes by amending the Road Safety (Vehicles) Interim Regulations 2020 (Vic). According to the Treasurer, the separate changes will modify the light vehicle registration concessions to ensure these financial incentives target vehicles powered by environmentally friendly alternatives to fuel. ZLEVs subject to distance-based charges will also continue to receive the $100 registration concession on their annual Victorian registration. Conventional hybrid vehicles will no longer be receiving the concession on annual Victorian vehicle registration. These vehicles, unlike PHEVs, are powered predominantly by a petrol or diesel internal combustion engine are superseded by many ICEVs without hybrid capabilities on the market that achieve similar fuel efficiency to conventional hybrid vehicles.

According to an article by Tom Burton writing for the Australian Financial Review (AFR): 

"The Victorian legislation is being seen as a test case for the rollout of electric cars, which the federal government predicts will make up 26 per cent of new car sales by 2030."

On the Bill's likelihood of passage through the Victorian Parliament the AFR goes on to report:

"The new charge is being opposed by the Opposition and Greens MPs, and the government needs the support of two crossbenchers. It is expected it will need to offer more concessions to promote electric vehicles to win legislative support for the Bill."

TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products. Nothing on this website should be construed as legal advice and does not substitute for the advice of competent legal counsel.


Zero and Low Emission Vehicle Distance-Based Charge Bill 2021 (Vic), explanatory materials and second reading speech available from TimeBase's LawOne Service.

Low-tech tax for high-tech electric cars (Tom Burton, Australian Financial Review, 19 Mar 2021)

Related Articles: