The Berejiklian government is investigating ways to tax electric cars to ensure the “wealthier end of society” who typically drive the vehicles contribute to maintaining the state’s roads.

But the move has prompted a warning that the state government could be “the laughing stock” of the world if it pushes to tax electric cars rather than offer incentives to encourage their growth.

NSW Treasury secretary Michael Pratt and deputy secretary Joann Wilkie confirmed to a budget estimates hearing earlier this month that tax measures for electric cars were being considered.

Treasury said there were a range of options on the table such as distance charging, extending registration duties or even Commonwealth levies on electric cars.

Ms Wilkie said governments would lose “a key source of revenue” through dwindling fuel excise as more people turned to electric and petrol and diesel vehicles were phased out.

“Electric vehicles at the moment are subject to registration duties, like all cars,” Ms Wilkie said.

“But apart from that, they do not contribute to taxation collected that is then used for the upkeep of roads. Governments also need to consider … what sort of infrastructure model we are looking [at] for charging stations.”

Ms Wilkie said Treasury was watching all the “policy experiments” around the world.

Mr Pratt told the hearing that “policy formulation” was still in its early days in NSW.

“But generally today the people who own electric vehicles are the wealthier end of society who are not paying a dollar for road transport,” Mr Pratt said.

The company involved hopes to build one hundred more by the end of the year but says Australia could miss an important window to the potentially lucrative industry.

The chief executive of the Electric Vehicle Council Behyad Jafari said NSW and Australia would be a “laughing stock” internationally if governments punished drivers who chose to buy electric.

Mr Jafari said NSW risked becoming “the world’s first market to not only not provide a financial incentive for electrical vehicle uptake, but implement a tax discouraging it.”

He said fuel excise went to general revenue and not directly to road infrastructure and electric vehicles already carry a “price premium”, with owners paying GST, stamp duty and luxury car tax.

“This means that a purchaser of a new electric vehicle is paying a range of taxes on that premium, while providing a range of societal, environmental and economic benefits,” Mr Jafari said.

NSW government figures show of the 6.6 million vehicles registered last year, 2274 were electric, a 25 per increase on the year before.

At the same time, the federal government is grappling with a projected shortfall in the $11.3 billion fuel excise, with forecasts showing 60 per cent of all new cars sold to be electric-powered by 2046.

Tax revenue from fuel excise has fallen 30 per cent since 2001.

The Opposition’s treasury spokesman Walt Secord said the policy was complex but the NSW government should not discourage the uptake of electric vehicles.

“The Berejiklian government must find ways to ensure electric vehicle users contribute to the cost of roads and road maintenance like traditional vehicle owners do,” Mr Secord said.

“But I fear the Berejiklian government will see this was a way to claw hundreds of millions of dollars a year in new revenue.”

Extracted from SMH