Victoria's government will refund $7 million in taxes collected from electric vehicle (EV) owners after the High Court declared the tax unconstitutional. 

The controversial road user charge, which imposed a fee of around 2 cents per kilometre on EV drivers, was challenged by two Victorian electric car owners. 

They argued that the charges were an illegal “tax grab” because they were an excise, which only the Commonwealth can impose.

In October, the High Court agreed, finding the Victorian tax was unconstitutional.

Treasurer Tim Pallas has confirmed the decision to repay the funds.

“We're now going through a process of identifying who it is that we need to rebate and we'll go through the process of making those rebates,” he said.

“I think we've even decided to be sufficiently generous, albeit there isn't an obligation to pay iThe repayment process is expected to take several months. 

The High Court's decision has implications for other states that had been considering similar levies on EV drivers.
The Albanese government has launched policies to eliminate barriers to EV adoption.