Keeping a car on the road in Victoria will cost motorists an extra $35 from July 1 next year, with VicRoads registration fees increasing from $191.60 to $226.60. Stamp duty on new cars will go up also, from 2.5 to three percent.
The increase will be used to cover a $120 million blowout in the development of Victoria's new registration and licensing system, scheduled to replace the current 23 year-old system in 2014.
Roads Minister Terry Mulder said that the existing system had been criticised in reports by the Ombudsman in 2005 and 2007, which found that the the development program for the new system had been under-funded.
"The current system was built well before the internet and has become fragile, inflexible and prone to failure over time. We need a system that provides swift and secure customer service, minimising time spent in transactions with VicRoads," Mr Mulder said.
He said that VicRoads currently processes more than 22 million transactions annually with demand growing by 5.7 per cent every year.
The government softened the blow by announcing the introduction of quarterly and six-monthly payment options, which will also come into effect with the new system.
Victoria is currently the only state that does not offer flexible payment plans for non-concession card holders.
Victorian Automotive Chamber of Commerce Executive Director, David Purchase, praised the introduction of the split payments, but said that the increased fees is "a sting in the tail".
“The Government should find the $120million required for a new VicRoads registration and licensing database elsewhere, rather than from motorists. While the change is welcome, it must be paid for out of consolidated revenue,” Mr Purchase said.
“This has been a long hard road, but we are pleased motorists will have a choice of how they pay their vehicle registration."