You may have seen headlines recently such as “Ute Tax” or “ Labor’s family car tax” but what actually is this?  Well, it is not a direct tax at all but an impost on car manufacturers to reduce their carbon emissions. 

The federal government unveiled plans in February for a new vehicle efficiency standard “requiring car manufactures to meet certain standards on grams per kilometer of fuel used”.  The proposed legislation is to be introduced to parliament in the first half of 2024 with plans to be implemented from 1 January 2025.  Vehicle manufactures will be required to meet the national annual average emissions target that will be reduced over time.  Those manufacturers that beat the target will earn credits and those not meeting targets will have two years to either trade credits with a different supplier or earn credits for themselves before financial penalties will be applied.   

What this means is that manufacturers may incur extra costs if they continue to sell less energy efficient vehicles, and hopefully encouraging more energy efficient vehicles to be sold here in Australia.  Currently the EU and US both have energy efficient standards and on average new passenger cars in Australia use 20% more fuel than in the US.  SUV’s and 4WD’s have been highlighted as more inefficient vehicles and hence the headlines implying a family car or ute tax.   

These standards are yet to go through parliament so we will have to watch this space as it unfolds.   



For further details see: 

Sources:   

Press Release King, Catherine, MP Minister  for Infrastructure, Transport, Regional Development and Local Government https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22media%2Fpressrel%2F9585863%22;src1=sm1 

Australian Government, Department of Infrastructure, Transport, Regional Development, Communications and the Arts website:

https://www.infrastructure.gov.au/infrastructure-transport-vehicles/vehicles/new-vehicle-efficiency-standard/australian-new-vehicle-efficiency-standard-frequently-asked-questions#:~:text=support%20more%20EVs%3F-,What%20is%20a%20New%20Vehicle%20Efficiency%20Standard%20(a%20Standard)%3F,they%20must%20meet%20or%20beat.