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this post was submitted on 12 Sep 2023
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In Australia, roads are paid for out of the general tax pool, and from a proportion of the registration cost. Fuel excise goes into the general tax pool and doesn't directly fund roads.
This hasn't stopped states from trying to implement a distance based tax on electric and low emission vehicles.
Victoria introduced one under the guise of needing extra money to pay for roads. It was a state-collected tax. The federal government collects fuel excise, so the state wasn't losing funding from electric car owners. The new tax collected didn't even go toward roads.
There were numerous other critical issues with this tax, but it's still running.
Distance based taxes are economically better because they internalize the externalities of driving. That is, driving more benefits the driver but is paid for by the general tax pool. This means people are encouraged to drive more than they should because the true costs are borne by society as a whole (including non-drivers) and not the individual driving.