High Court of Australia Rules Victoria’s Electric Road-User Tax Unconstitutional

Regarded as one of the biggest constitutional challenges in 25 years, the High Court of Australia (HCA) has ruled against the State of Victoria in Vanderstock v Victoria [2023] HCA 30 finding that Victoria’s road-user charge for plug-in hybrid and electric vehicles is unconstitutional.

As noted by the HCA at the outset of its judgment, this is the first time this century that the High Court has had to examine the scope and operation of section 90 of the Constitution in relation to the power of the Commonwealth Parliament to impose duties of customs and of excise exclusive of the powers of the States and self-governing Territories.

The plaintiffs in the proceeding, owners of Zero and Low Emission Vehicles (ZLEV) brought the proceeding invoking the original jurisdiction of the HCA as to the validity of the central provision of the Zero and Low Emission Vehicle Distance-based Charge Act 2021 (Vic) (ZLEV Act) requiring the registered operators of ZLEVs to pay a charge for the use of ZLEVS on roads in Victoria and elsewhere in Australia.

Sole Issue in Dispute – Whether ZLEV Act imposes a duty of excise?

The sole issue in dispute was whether the impugned provision in the ZLEV Act was invalid on the basis that it imposes a duty of excise within the meaning of section 90 of the Constitution.

In a lengthy judgment spanning 393 pages, the HCA looked at the historical context of section 90, including pre-federation history, contemporary constitutional references and a variety of cases which were concerned with a duty of excise and customs duties.

Dickenson’s Arcade Reopened and Overruled

In particular, in considering Dickenson’s Arcade Pty Ltd v Tasmania (1974) 130 CLR 177, the HCA reopened the decision and overruled it. In this regard, the HCA noted that:

‘A tax properly characterised as a tax on goods does not fall outside the constitutional conception of a duty of excise merely because it is imposed at the stage of consumption of those goods’.

4-3 Majority Decision – Section 7(1) invalid

The HCA was deeply divided in coming to its decision, however, the majority by 4-3 found that section 7(1) of the ZLEV Act was invalid on the basis that it imposes a duty of excise within the meaning of section 90 of the Constitution.

Impacted by ZLEV Charge – Seeking Cancellation of Invoice or Refund of Charge Paid

If you have been previously issued with a charge for being the registered operator of a ZLEV, as a result of the HCA’s decision in Vanderstock, we can assist with seeking a cancellation of invoices issued and/or a refund of the charge previously paid to the Department of Transport and Planning.   

Broader Implications – State Taxes on Goods Potentially Impacted

While the implications of the HCA’s decision in Vanderstock concerned the ZLEV Act, there are broader implications to state taxes.

The Vanderstock decision sheds light on the ambit of the respective state governments’ legislative powers, particularly in the realm of state taxation.

More particularly, it raises concerns as to whether certain state taxes which levy an impost on the production or manufacture, sale, distribution or consumption of goods are potentially unconstitutional if it is of such a nature as to affect the goods as the subjects of manufacture or production or as articles of commerce.

Duties on goods in Victoria, mining royalties in Western Australia, livestock duty and even potentially duty on anything deemed to be land/fixtures (eg. Wind turbines) could potentially be impacted by the Vanderstock decision.

In the wake of the High Court of Australia’s groundbreaking ruling against Victoria’s electric vehicle road-user tax, if you’ve been affected or have faced similar state taxation issues, our State Taxation Lawyers are ready to guide you. This landmark decision also raises questions about the constitutionality of various state taxes on goods, prompting the need for expert legal assistance. Contact us for support in navigating these evolving legal landscapes.

About The Author - Thomas Abraham

Thomas Abraham is an accomplished senior lawyer with expertise in state taxation advice and litigation. His extensive background and experience make him an invaluable asset to our...