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High Court rules against Victoria’s electric vehicle road charge


UPDATED: The state “imposes a duty of excise” within the meaning of s90 of the Constitution, its judgement says.

By Philip King 11 minute read

The High Court struck down Victoria’s electric vehicle road charge yesterday because it “imposes a duty of excise within the meaning of section 90 of the Constitution” and so is invalid.

The landmark ruling – a 4:3 majority decision – found against the state’s Zero and Low Emission Vehicle Distance-based Charge Act 2021 (Vic), which imposes a levy on kilometres driven in electric and hybrid cars, after the case was brought by two EV owners.

Christopher Vanderstock and Kathleen Davies paid the levy but began legal action against the State of Victoria in September 2021 on the basis that it contravened s90, and were supported by the Commonwealth Attorney-General and the Australian Trucking Association.

The attorneys-general of every state and territory backed Victoria.

In Vanderstock & Anor v State of Victoria [2023] HCA 30, the High Court said s7(1) of the Victorian act required the registered operator of a zero or low emissions vehicle (ZLEV) to pay a charge for “use of the ZLEV on specified roads”, which effectively meant all public roads in Australia.

The ZLEV charge would be determined annually for each kilometre travelled and was set at 2.5c for an EV or hydrogen vehicle and 2c for a plug-in hybrid when it was introduced in FY2021–22 (currently 2.8c and 2.3c).

The High Court said s90 of the Constitution gave Commonwealth Parliament the power “to impose duties of customs and of excise” that was “exclusive” of the powers of the states and self-governing territories and so the case hinged on whether the EV road charge was a “duty of excise”.

“The court reopened and overruled its decision in Dickenson's Arcade Pty Ltd v Tasmania (1974) 130 CLR 177, which held by majority that a tax on the consumption of goods does not constitute a duty of excise,” it said.

“The court held that an excise within the meaning of s90 is an inland tax on goods. The question of whether a tax is to be characterised as a tax on goods turns on whether, first, the tax bears a close relation to the production or manufacture, sale, distribution or consumption of goods, and, second, whether the tax is of such a nature as to affect the goods as the subjects of manufacture or production or as articles of commerce.”

“The ZLEV charge is a tax on goods because there is a close relation between the tax and the use of ZLEVs, and the tax affects ZLEVs as articles of commerce, including because of its tendency to affect demand for ZLEVs.”

A Victorian government spokesman said the state was disappointed with the outcome but accepted the court’s ruling. But the judgement derails plans by other states, including NSW and Western Australia, to introduce similar charges of their own.

David Hertzberg of Equity Generation Lawyers representing the two EV drivers said the High Court had made a “landmark constitutional decision”.

“Today’s judgement means that Victoria’s electric vehicle tax is invalid,” he said. “It also sets a precedent which will likely prevent other states from implementing similar legislation.”

Mr Vanderstock said it was a great outcome for Victorian electric vehicle drivers and all Australians.

“We believe that Victoria’s electric vehicle tax discouraged people from buying EVs, and punished existing EV owners who are trying to do the right thing,” he said. “It was an ad hoc, piecemeal policy which undermined our collective efforts to reduce emissions from transport.

“We hope that today’s decision is a step in the right direction towards a cleaner, lower emissions future.”

The Electric Vehicle Council, which lobbies for EVs, said a state-based charge was not the way forward.

EVC chief executive Behyad Jafari said the High Court ruling would pave the way to better policy across the nation.

“The electric vehicle industry warned the Victorian government this policy was muddleheaded years ago, and the offer has always been on the table to work with the state on a more sensible approach,” said EVC chief executive Behyad Jafari.

“Any road user charge scheme should be national and we now look forward to working with the federal government on sensible road funding reform, without singling out drivers who are trying to do the right thing.”

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Philip King

Philip King


Philip King is editor of Accountants Daily and SMSF Adviser, the leading sources of news, insight, and educational content for professionals in the accounting and SMSF sectors.

Philip joined the titles in March 2022 and brings extensive experience from a variety of roles at The Australian national broadsheet daily, most recently as motoring editor. His background also takes in spells on diverse consumer and trade magazines.

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