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Ask LH: Why Does My Car Registration Cost So Much?

Dear Lifehacker, I just received my vehicle registration renewal notice from VicRoads today. $696.50 for an year, including a TAC charge of $422! Why do we have such high renewal fees in Victoria? I was curious and discovered a few sources on the web showing that the average amount a Texan pays for car registration is $US52.75. Why do we have to fork out almost 15 times the amount people pay in the US? Thanks, Contemplating Texas.

Picture by Stephen Edmonds

Dear CT,

Frustration over the rising costs of car ownership is common. That said, trying to compare the cost of living between entirely different economies is rarely constructive. Knowing the basic cost of a single item doesn’t mean much if you can’t put that into the broader context of typical wages, other living expenses and the size of the population (Texas has more residents than the whole of Australia). More problematically in this case, you’re not actually comparing identical items.

The Texas Department of Motor Vehicles does indeed indicate that the registration fee for a standard passenger vehicle is $US52.75. That’s not an average, by the way: it’s a fixed amount. On top of that you’ll also pay an additional fee (between $5 and $11.50) depending on which county you live in. Even with that added, it is a lot lower than the Victorian charges (though it’s worth noting that in other US states, the figures can be much higher and the methods more complex).

The Victorian calculation uses a more granular approach which factors in the location of the vehicle. For a conventional passenger vehicle in the metropolitan area, that does work out at $696.50.

However, the amount you pay in Victoria doesn’t just cover registering the vehicle (as it does in the Texan example). That $696.50 is made up of three components: a $232.30 registration fee, a Transport Accident Charge (TAC) of $422, and insurance duty of $42.20.

The vast majority of the total comes from the TAC, which, as the VicRoads site explains: “are used to pay for treatment and support services for people injured in transport accidents”. While some states (such as NSW and Queensland) let you choose your own insurer to cover the cost of injuries to others in accidents, Victoria has centralised that function in the TAC.

Does that mean you can escape similar costs in Texas? No. As the Texas DMV site explains elsewhere: “In Texas, you must show you have insurance coverage for a minimum of $30,000 per injured person, up to a total of $60,000 for everyone injured in an accident, and $25,000 for property damage.” You’ll still be paying for third-party insurance, just via a separate organisation. Even moving to another Australian state won’t necessarily get you a better deal; as this comparison of rates around Australia shows, there’s at least one state (WA) charging even more for basic registration.

Car registration fees are undoubtedly annoying, but comparing a simple registration fee from the US with a selected example from the Australia that incorporates insurance costs and safety funding doesn’t make sense. You’d be better off expending that energy finding a car that’s cheaper to run overall, or campaigning with your local member to ask why that basic registration fee ($232.30) is so high. Just make sure you’re campaigning about the actual issue at hand, not a largely spurious comparison with an overseas location.

Cheers
Lifehacker

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