A proposed national road tax for electric vehicles (EVs) appears to be on hold after comments from the Federal Transport Minister suggested it could hamper the recent surge in sales.
As fuel prices reached record levels across Australia in March 2026, the proportion of electric vehicles sold also increased by 88.9 percent to a new high of 14.6 percent market share.
The best-selling electric vehicle, the Tesla Model Y, was the third most popular vehicle overall, behind the Ford Ranger and Toyota HiLux.
But as electric vehicle sales rose, the expected announcement of a road toll came closer. It was originally supposed to be anchored in the federal budget in May of this year before being implemented in 2028.
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Transport Minister Catherine King has all but ruled out announcing a road tax in next month’s federal budget.
“It obviously needs to be legislated through Parliament and I’m not sure there’s a route for it through Parliament at this stage. We’ll wait and see,” she said ABC Insider yesterday.
“At the moment we are trying to encourage the adoption of electric vehicles as much as possible. We do not want to prevent this at all, so a balance has to be found here.
“We want to try not to discourage the adoption of electric vehicles, especially now that we’re seeing such a surge, so maybe now isn’t the right time.”
The proposed road toll had already been raised in 2025 by Federal Treasurer Jim Chalmers, who said the government would “accelerate work” to implement it.
It is billed per kilometer driven, drivers can report the annual mileage or use the GPS tracking in the car to calculate the distance driven.
A key motivation for road charging for electric vehicles is to make up for lost revenue from drivers who don’t pay the fuel tax. This was also halved for three months from April 1, 2026 in order to reduce gasoline and diesel costs.
This pause may provide the government with an opportunity to rethink its approach as the number of electric vehicles on Australian roads continues to rise.
Victoria was the first Australian state to introduce such a road fee back in 2021, and the state governments of New South Wales, South Australia and Western Australia have all proposed similar fees.
Before the fee was abolished, electric vehicle owners in Victoria had to pay 2.8 cents per kilometer driven, while plug-in hybrid (PHEV) owners were charged 2.3 cents per kilometer.
The Supreme Court of Australia declared the system unconstitutional in 2023 and forced the state to abandon the policy and refund revenues generated under this system, paving the way for a federal system.
This is what Polestar Australia boss Scott Maynard said Daily Sparkz Road pricing offers a broader opportunity than just increasing the cost of owning an electric vehicle.
“This is unavoidable to some extent and I don’t deny that the government needs to top up fuel duty through road pricing, but it would be a great shame if it were imposed on electric vehicles as a thinly veiled tax,” Maynard said.
“Road pricing is a fantastic opportunity for the government to reconcile all the various fees, taxes, levies and duties imposed on the Australian motorist who wishes to purchase a car, register it, obtain a driving license and drive it,” he added.
“Instead it’s just been taken to the extreme – if the current rhetoric holds up – so this may be a missed opportunity and I hope that doesn’t happen.”
It is unclear whether the Australian government will follow New Zealand’s lead when it eventually introduces a road tax.
In August 2025, the New Zealand government announced plans to eliminate the fuel tax and instead impose a road user charge (RUC) on all vehicle types by 2027, based on distance traveled and vehicle weight. Petrol-powered vehicles will join a system that already applies to diesel vehicles, electric vehicles and PHEVs.
MORE: The Australian government is considering a road tax for electric vehicles this year amid criticism of the fuel excise tax
