Vic to refund cash from invalid electric vehicle tax

Victorian electric vehicle drivers will be repaid millions under an unconstitutional state tax, but it could take months for the cash to flow.

The High Court last month ruled Victoria's electric vehicle tax constitutionally invalid as states do not have the power to impose such excise taxes on consumption.

Treasurer Tim Pallas confirmed the state government had received advice that it was obliged to repay money accrued by the tax.

"We're now going through a process of identifying who it is that we need to rebate," he told reporters at state parliament on Wednesday.

Mr Pallas warned it could several months to identify who is owed money and for the repayments to lob in bank accounts.

About $7 million was raised by the tax since it came into effect in mid-2021.

"We've even decided to be sufficiently generous, albeit that there isn't an obligation to pay interest, to pay the interest on the retention of those funds," the treasurer said.

"It's a relatively small amount. What is not a relatively small amount is a reimagining of the constitution by the High Court ... and it's going to cause very substantial problems for every state."

Victoria's road user charge was designed to match the contribution drivers of fuel-powered vehicles already make to road maintenance through a Commonwealth fuel excise.

Victorian drivers Chris Vanderstock and Kath Davies launched the lawsuit shortly after the state government introduced the laws targeted at electric, hydrogen and plug-in hybrid vehicles.

The law charged electric and hydrogen vehicle owners 2.8 cents for each kilometre they travelled during the year and plug-in hybrid vehicle owners 2.3 cents.