Victorian electric vehicle drivers launch High Court challenge against new ZLEV charge


The new Victoria (Vic) Zero Emission Low Emission Vehicle Fee Act 2021 is under challenge on the grounds that it is excise that states cannot levy.

Two Victorian car owners have launched a High Court action against the new Victoria’s Zero and Low Emission Vehicle Distance-Based Charges Act, 2021 (Vic) (ZLEV Law), challenging its validity in light of section 90 of the Commonwealth Constitution.

The claim was filed on September 16, 2021. The plaintiffs, Chris Vanderstock and Kathleen Davies, are the Victorian-era registered owners of an electric vehicle and a plug-in hybrid vehicle, respectively. These vehicles are “ZLEVs” for the purposes of the ZLEV Act. Charges of 2.5 cents / km have been imposed on them by the ZLEV law since July 1 of this year.

This article describes the complainants’ claim that the ZLEV Act violates the Australian Constitution, Victoria’s original defense, and what might happen next in this case.

The legal basis for contesting the kilometer charge for zero-emission and low-emission vehicles

The Complainants claim that the ZLEV Act is invalid because it seeks to impose an excise duty within the meaning of Article 90 of the Constitution, a power which rests exclusively with the Parliament of the Commonwealth of Nations. This section reads as follows:

“On the imposition of uniform customs duties, the power of the [Commonwealth] Parliament to impose customs and excise duties, and to grant bonuses on the production or export of goods, will become exclusive.

The notice of constitutional matter filed by the plaintiffs cites obiter dicta in Ha v New South Wales (1997) 189 CLR 465, in which their Honors specifically observed that in that case it was “not necessary to consider whether a tax on the consumption of goods would qualify as an excise tax “. The complainants now seek to test this issue.

The complainants’ argument is as follows:

  • The ZLEV law obliges owners to pay the ZLEV royalty, which they describe as a “compulsory exaction of money for public purposes, enforceable by law … [and which is] be credited to the Consolidated Fund and therefore form part of general State revenue “(ie it is a tax).
  • The ZLEV charge applies to the use of vehicles, which are “goods”.
  • The “liability test” for the ZLEV charge is travel on “specified roads”, which effectively includes any use by an owner of the ZLEV (unless the use for travel on property or private roads is proven), and therefore the liability test relates to the “consumption and / or use” of the ZLEVs. The Complainants point out that the State is not responsible for the maintenance of all roads which are “specified roads”, as some are maintained by councils, toll road operators or other private operators, to both in Victoria and interstate. They also note that ZLEV owners must also pay the ZLEV charge for kilometers driven on existing toll roads (while non-ZLEV owners do not incur this double charge).
  • Consequently, the ZLEV tax is an internal tax on the consumption or use of goods constituting an excise tax within the meaning of Article 90.

Victoria’s argument in response: it’s not excise

Victoria’s main argument rejects the idea that an “excise tax” should be understood to extend to an internal tax on the consumption or use of goods. However, as an alternative defense, he argues that a tax should only be understood as an excise duty if it applies to locally produced goods and discriminates against those goods in favor of the goods. imported.

Victoria’s defense characterizes the ZLEV charge differently from the plaintiffs and raises several alternative or conditional arguments to preserve the validity of the ZLEV Act. In summary:

  • Registered ZLEV operators must pay the ZLEV fee as a contribution to the cost to the state of maintaining roads and / or building infrastructure related to ZLEVs – ie. it is a user charge, and not an “internal tax” as such.
  • Even though the ZLEV charge is considered an internal tax, it is a tax on the activity of using ZLEV only on “specified routes” (not generally on “use” or “consumption” ).
  • If, however, the ZLEV royalty is considered a tax on the use or consumption of ZLEV, the internal taxes on the consumption or use of goods should not constitute an excise tax.
  • Finally, even if the ZLEV tax is considered an internal tax on the use or consumption of goods, it should not be considered an “excise tax” for the purposes of Article 90, because it is not does not apply to locally produced goods or discriminate against such goods in favor of imported goods.

What does this mean for other states that have introduced EV fees?

Some of the relevant key elements of Victorian law also exist in the NSW Legislation (Electric Vehicles (Revenue Arrangements) Act 2021 (NSW)) and the SA Legislation (Motor Vehicle Amendment Act 2021 (SA) (Electric Vehicle Levy)):

  • Levels of charge are hard-coded into legislation and involve similar calculation methodologies (cents / km driven in the previous registration period).
  • The roads covered by the laws use different terms (“specified roads” for Victoria, “road or road-related area for SA,” public land “and” private land “in NSW), but in each case:
    • kilometers driven in other States (or Territories) will also be used to calculate the charge; and
    • there is a presumption that all kilometers shown on the vehicle’s odometer are subject to the charge, unless proven otherwise.

However, there are also a few differences, including:

  • In addition to the regular retrospective ZLEV fees, NSW also offers a prepayment option based on estimated future trips.
  • During its deliberations, the NSW Legislative Council demanded the inclusion of an express intention in section 7 that “[i]It is Parliament’s intention that the full amount of revenue collected under this Road User Charges Act be paid into the Consolidated Fund. This statement does not appear in the ZLEV law or the SA law.
  • NSW law has come into effect, but fees will not be collected until:
    • July 1, 2027; Where
    • an earlier date when the treasurer declares that sales of battery electric vehicles have exceeded a threshold of 30% of total vehicle sales.
  • An equivalent threshold of 30% is itself the legal trigger for the entry into force of the amendments made to the Motor Vehicle Act 1959 (SA) made by the SA Act, and this legislation is therefore not yet largely operational.

Is hydrogen the missing element?

While the plaintiffs own electric or plug-in hybrid vehicles, the third category of vehicles covered by the current legislation on electric vehicles – hydrogen cars – is not represented. This is remarkable, given that COAG currently recognizes the possible need to shift from a petroleum-based excise revenue source to a hydrogen-based excise revenue source over time. Australia’s National Hydrogen Strategy includes the following statement:

“Hydrogen is not explicitly considered as an energy source in [existing excise] diets. As the production and use of hydrogen increases, appropriate taxation, excise duties, fees or levies could help ensure that the community shares the economic benefits of developing a hydrogen industry…. Governments will maintain the revenue agreements that currently apply to hydrogen, but may revise them in the future. “

If the federal government were to excise hydrogen fuel, based on current forms of ZLEV, NSW, and SA, charges on hydrogen vehicle travel would be imposed at the level of the United States. State and federal level.

Legislative states have already worked to minimize the impact of any initial double taxation of duties by reducing the per-kilometer charge for plug-in hybrids from 0.5 cents / km to 2 cents / km, recognizing that excise duty on fuel continues to be paid. by owners of rechargeable electric vehicles. However, hydrogen vehicles are currently exposed to the full load of 2.5 cents / km (like fully electric vehicles). Since these royalty rates are hard-coded, additional legislation is needed to change the level of the royalty.

What’s next for the challenge?

Under the October 15 consent order, the parties agreed to exchange opening statements of their observations with the aim that the complainants would file an agreed special case by February 9, 2022. A special draft is to be provided by the parties. complainants in Victoria by November 26, 2021.

However, the constitutional case notice filed on September 16, 2021 has been sent to all state and territory attorneys general. So far, only NSW has filed a Notice of Intervention in favor of Victoria (November 5, 2022). At this point, it is not clear whether this intervention can prevent an agreement on a particular case, or the number and timing of hearings, given the mix of similarities and differences between structure and dates. entry into force of the three legislative regimes.


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