Australians could pay a road user charge based on their income under a controversial proposal designed to overhaul how the country funds its roads.
The proposal, put forward by the McKell Institute and backed by the Electric Vehicle Council (EVC), argues the current fuel excise system unfairly punishes lower-income Australians living in outer suburbs with long commutes.
Under the modelling outlined in the report, lower-income earners could pay approximately 3.74 cents per kilometre, or equivalent to $444 annually, while high-income motorists could pay up to 12.88 cents per kilometre, approximately $1531 per year.
The report says the charges would be linked to income through the tax system.
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The proposal builds on recent findings that electric vehicle uptake is growing in Australia’s outer suburbs, where working families are most impacted due to longer commutes and rising fuel prices.
McKell Institute chief executive Edward Cavanough said the existing system creates unequal outcomes for motorists.
“For example, a nurse driving from the outer suburbs to the hospital for a shift will pay far more fuel tax than a higher-income earner who lives close to their office,” Mr Cavanough said.
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The report also claims lower-income Australians are increasingly being pushed into outer suburban areas by the housing crisis, leaving them with fewer public transport alternatives and longer daily commutes.
“They’re driving further because they have been pushed to the outer suburbs by the housing crisis, which means they’re left with fewer public transport options and they’re more likely to drive older and less fuel-efficient cars,” Mr Cavanough said.
“The fuel excise already punishes them for circumstances out of their control.”
While the Institute’s report modelled different effective charges across income brackets, Mr Cavanough has clarified that the proposal would likely operate through tax offsets or compensation rather than different raw per-kilometre rates for every driver.
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“The per-kilometre rate would be consistent for all drivers, but lower-income Australians forced into the longest commutes just to get to work would receive compensation through the tax system, in the same way other tax offsets already work,” Mr Cavanough said.
Under the broader proposal, electric vehicles would initially remain exempt from road user charging until they reach 30 per cent of the national fleet, before a wider system is gradually introduced across all vehicle types while fuel excise is wound back.
Potential options outlined for tracking kilometres travelled include self-reporting during registration renewals, odometer checks during inspections such as green slips, or future in-car technology allowing motorists to monitor and declare their travel distances.
