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NSW Budget Brings Leadership to Automotive Tax Reform

The NSW Government has delivered a financial reform and automotive incentive package that sets the precedent for other Governments to follow in its drive to increase electric vehicle uptake across the State, according to the Federal Chamber of Automotive Industries.

The elimination of stamp duty on electric vehicles (EV) up to $78,000 from 1 September 2021 and all EVs including Plug In Hybrid (PHEV) from 1 July 2027, $151 million investment in EV charging infrastructure in metropolitan and regional areas, EV access to transit T2 and T3 lanes and cash rebates for EV customers represent some of the most significant reforms ever seen in Australia in support of new automotive technology.

A road user charge of 2.5c/km for EV and a 2.0c/km for Plug-in Hybrid Electric Vehicles (PHEV) will be applied from 1 July 2027 or when EVs make up at least 30 per cent of new car sales.

“The direction being set by the NSW Government has the capacity to kick start serious EV penetration into Australia,” FCAI Chief Executive Tony Weber said.

“As the future of mobility continues to rapidly transform, now is the time for Governments to relieve motorists of a myriad of outdated, confusing and inefficient charges and replace them with a simplified road user charging approach. 

“The FCAI released a discussion paper last month advocating for the introduction of a road user charging approach aimed at eliminating charges such as registration, sales taxes and luxury car taxes and replacing them with one charge.

“This change in the taxation for EVs and PHEVs, significant investment in charging infrastructure, initiatives supporting fleets and consumer incentives balanced with a user charge represent the most significant steps we have seen in decades.”

Mr Weber acknowledged the introduction of incentives for electric vehicle customers.  A $3,000 rebate will be available for the first 25,000 EVs under $68,750 sold from 1 September 2021.

“The incentives package for electric vehicles is consistent with actions being taken by forward thinking governments across the world,” he said. 

Mr Weber said the FCAI and its members would work alongside the NSW Government to identify and introduce future reforms that supported the simplification and efficiency of future automotive road user charging structures and systems.

“Ideally, road user charging decisions should not be based around specific technologies and particularly those that are in their relative infancy in the Australian market. An efficient road user charging scheme can address all vehicle users regardless of the type of vehicle they drive, how often it is driven and the purpose of the travel.

Mr Weber added that the actions taken by the NSW Government once again highlighted that the Federal Government risked missing an opportunity to provide leadership and policy direction on the increased take up of Zero and Low Emissions Vehicles (ZLEVs).

“The FCAI has consistently advocated for a national approach to these issues that ideally would be Federally-led to avoid the prospect of individual State Governments introducing their own standards and incentive programs in support of ZLEVs.

“Consistency is the critical element for Australian customers. If other States introduce their own programs, they must align.  Otherwise, the result will be another disjointed and chaotic system like the introduction of different rail gauges across the country.”

Mr Weber said that the FCAI supported the introduction of sensible and achievable CO2 emissions targets that allowed customers to choose the vehicles and technology they wanted to suit their personal and commercial needs.

“In the long term, the aim is to reduce CO2 emissions from vehicles. Governments should focus on targets, not technologies. If governments set the targets, the car makers will deliver the range of vehicles into the market that achieve the environmental outcomes and meet the needs of Australian motorists.”