Australia is exploring a national road-user charge for electric vehicles, with Treasury modeling a potential rollout and consideration of how states would enforce it, possibly as part of broader tax reform and the May budget.

The plan would likely use a distance-based system, potentially employing GPS tracking or odometer readings, to replace or offset revenue lost from fuel excise as EV usage grows, and could be introduced as early as 2028.

Industry figures argue that maintaining incentives for EVs is crucial to accelerate fleet adoption and meet emissions targets, especially as markets shift globally.

Policy discussions include narrowing or removing FBT exemptions for EV leases, a move that industry voices warn could slow EV uptake.

Officials warn the current fuel excise model is unsustainable for funding roads over the coming decade, signaling major policy changes may be needed.

The Electric Car Discount supports novated leases for employees buying EVs, with about a quarter of EVDealer Group’s 2025 sales coming from novated lease buyers, illustrating the policy’s impact on consumer demand.

Fuel excise remains a fixed per-litre tax indexed to CPI, with no plan to cut revenue; however, funding is increasingly directed to the federal consolidated revenue.

The 2024 federal budget anticipated a decline in fuel excise receipts over the next four years due to EV uptake and reduced petrol consumption.

The debate fits into broader discussions that current tax arrangements won’t support future road investment as vehicle technology evolves away from petrol.

EV sales surged nearly 96% year over year, now making up about 11.8% of new vehicle sales, fueling debate over how roads are funded.

Ongoing leaks and reporting point to reforms and the fiscal rationale behind reconsidering EV-related tax breaks, with outlets noting the broader context.

Other jurisdictions, like New Zealand planning a distance-based road charge by 2027, inform Australia’s thinking, while past state efforts in Victoria and NSW faced constitutional/legal hurdles before moving toward a national framework.