In Australia, drivers currently pay a fuel excise of 51.6 cents per litre every time they fill up. According to the Government, that money goes towards building and maintaining the nation’s roads. But EV drivers currently pay nothing. The Productivity Commission has warned that Australia’s $12 billion a year fuel excise is in “terminal decline” as more drivers switch to low-and zero-emission cars. The proposed solution, currently being discussed and advanced by Treasurer Jim Chalmers, is a distance-based charge for EV drivers, but industry experts say it could be rolled out more broadly to cover all light vehicles, like in New Zealand. If that happens, it could mean all motorists pay a set fee for every kilometre they travel, regardless of whether they drive a diesel ute, petrol SUV, hybrid small hatchback or electric sedan. MORE: New road charge coming for EV drivers What is the road-user charge? Currently, Australian drivers of petrol and diesel pay a fuel excise – a tax of 51.6c per litre – every time they fill up. This tax money is used to build and maintain roads. Electric vehicle (EV) owners currently pay nothing, meaning as more Australians switch to EVs, the government’s road funding pool is shrinking. A road-user charge (RUC) would change that by making EV drivers pay for each kilometre they travel. The aim is to ensure all road users contribute to the upkeep of the network, regardless of what powertrain they drive. In New Zealand, the approach is going even further. From 2027, all light vehicles – petrol, diesel, hybrids, and electric will be charged based on distance travelled and vehicle weight. This national approach means everyone pays for the exact road use they generate, but it also means some are paying more than others. If the same road-user charge is applied to all light vehicles in Australia, it’s understood that would be instead of paying fuel excise, not on top of it. However, this is a big shift and has not been discussed or committed to yet. MORE: EV tax ‘makes no sense’ How would it work? Victoria implemented a road user charge for electric and plug-in hybrid vehicles that later failed a court challenge, leading to millions of dollars in refunds. It worked like this: – Flat rate for EVS of approximately 2.8c/km – Flat rate for Plug-in hybrids of approximately 2.3c/km – Distance measured by odometer photos or an app – Funds directed to road maintenance and construction There have been discussions about exemptions or rebates for regional motorists, who often drive far greater distances, and others argue the charge should eventually apply to all vehicles, not just EVs. New Zealand’s Road User Charge (RUC) framework does not offer specific exemptions or rebates for regional motorists based on travel distance. However, there are exemptions for certain vehicle types, such as: – Electric vehicles over 3.5 tonnes (heavy EVs), remain exempt until 1 July 2027. – Light electric vehicles under 1,000kg remain exempt. – Vehicles unsuitable for public roads or used almost exclusively off-road can apply for exemptions. MORE: China unveils plan to take on Tesla in Australia When could it happen? Prime Minister Anthony Albanese has ruled out new taxes this term, so not before 2027. Treasurer Jim Chalmers has signalled it as a “second term” reform, after further consultation with states and industry. If the RUC is applied to EVs only Using Victoria’s scrapped 2.8c/km rate: City driver – 12,000km/year – EV: $336 a year (currently $0) – Petrol/diesel: No change – still pay fuel excise Regional driver (or high-mileage drivers) – 30,000km/year – EV: $840 a year (currently $0) – Petrol/diesel: No change – still pay fuel excise If the RUC is applied to EVs only, then EV owners, especially high-mileage or regional drivers, will be impacted. Outer-suburban and regional drivers typically driver far more than inner city drivers, not because they want to, but because they have to. According to property.com.au data buyers searching for home up to an hour from the CBD have dramatically more choice, with as much as eight times the number of houses available compared to a 30-minute radius. What if it expands to all vehicles like New Zealand? If Australia adopts a national RUC for light commercial vehicles, like New Zealand, the impact on your wallet would depend heavily on the type of vehicle you drive and how far you travel each year. For example, a large ute or SUV such as a Toyota HiLux, Ford Ranger or Toyota LandCruiser Prado uses approximately 10L/100km, which means drivers would pay roughly $336 a year under a 2.8c/km charge if they drive the national average of 12,000km. That’s about $283.20 less than the $619.20 you’d currently pay in fuel excise, and the savings would be even bigger for high-mileage regional drivers. If the RUC is applied to everyone, similar to what New Zealand is implementing in 2027, then heavy/less efficient vehicles like petrol or diesel utes and SUVs will come out ahead. While EVs and very efficient hybrids will pay more than under fuel excise. However, owning an EV and paying per-km RUC will still be cheaper than what ICE drivers pay via fuel excise.