Most first-world countries have a variety of incentives designed to encourage the purchase and use of Electric Vehicles (EVs) on public roads.

Wikipedia has a great summary of these incentives. Unfortunately, Australia is conspicuous by its absence from that list of enlightened countries. There are no meaningful incentives from the federal or state government in Australia to help to drive the adoption of zero emission vehicles.

Tesla Model S Dashboard – the future awaits

EV’s can have a lower total cost of ownership than an internal combustion engined based vehicle, because the ‘fuel’ cost is much lower. However, the relatively high cost of the batteries means the up-front cost is typically higher.

To address this, most countries who have EV incentives focus those incentives upon reducing that up-front cost. This is typically done via tax credits.

In Australia, far from encouraging EV’s, we drive up their purchase cost by disproportionately adding tax to the sticker price!

That is because we have a federal “Luxury Car Tax” (LCT), which applies an import tax to vehicles above a defined threshold price.

Regardless of the rationale (or lack thereof) for the continued existence of LCT (it obviously didn’t save the local car industry),  there is a clear principle at play in its application.

In the the current LCT tax regime, cars below a defined threshold of fuel efficiency attract a lower effective rate of LCT.

If the principle of lower emission/higher energy efficiency vehicles being worthy of an LCT tax break applies, then surely any cars that generate zero emissions should attract an LCT of… zero.

Tesla Model S Energy Efficiency Label

This notion of ‘zero tax for zero emissions’ seems so darned obvious as an incentive to help consumers reduce atmospheric pollution via their choice of car.

Unfortunately, this isn’t the case with the LCT regime today.

As a result, we are living in a country where consumers are being punitively taxed for choosing a zero emission vehicle.

A great stretch goal would be for Australia to catch up with is international peer nations and install some positive consumer incentives to promote the adoption of EV’s.

But until that happy day, I wish the federal government could at least start out by removing the punitive LCT from the sticker price of zero emission vehicles.

The presence of LCT on zero emission vehicle purchases means that consumers who are trying to do their bit by investing in cars of this sort are paying additional tax for the privilege.

That hardly seems fair.