Vanderstock and the future of federal– state tax powers

Published Date: 7 Dec 2023


In its recent decision of Vanderstock v Victoria, the High Court has ruled by a 4:3 majority that the Victorian electric vehicle road user charge is unconstitutional. The court held that s 7(1) of the Zero and Low Emission Vehicle Distance-based Charge Act 2021 (Vic) is invalid as it imposed a duty of excise prohibited by s 90 of the Constitution. Section 90 of the Constitution makes exclusive the power of the Commonwealth Parliament to impose taxes that are duties of customs and excise. Any duty of customs or excise imposed by a state, or by a territory, is therefore invalid. The decision has expanded the range of taxes that can only be levied by the Commonwealth Parliament, to the exclusion of the states. This decision is likely to have broad repercussions for the tax base of the states and the federal–state distribution of taxation powers (ie it will increase the so-called “vertical fiscal imbalance”).

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