Dutch Cabinet Approves Mileage Tax; In Effect in 2012 if Approved by Parliament
14 November 2009
The Dutch Cabinet on Friday approved a new road tax bill that would eliminate the current motor vehicle tax and purchase tax and replace them with a charge per kilometer driven, starting in 2012 and increasing through 2018. The measure needs to be approved by the Dutch Parliament before becoming law.
The Dutch Ministry of Transport, Public Works and Water Management cited research showing that the number of vehicle kilometers driven will decrease by about 15% under such a mechanism. The Ministry also suggested that motorists seeking alternatives such as public transport will increase by 6%, while traffic fatalities are expected to decrease by about 7%. Emissions of CO2 and particulate matter are expected to decrease by more than 10%.
Different vehicle types will have different base rates, determined by CO2 emissions or weight. The average rate for a car is expected to be:
| Dutch Mileage Tax | |||||||
|---|---|---|---|---|---|---|---|
| 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | |
| €/km | 0.03 | 0.035 | 0.04 | 0.046 | 0.053 | 0.061 | 0.067 |
| US$/mi | 0.072 | 0.084 | 0.097 | 0.111 | 0.127 | 0.146 | 0.161 |
Each vehicle would have a GPS device that records driving data, which would be sent to a collection agency that will issue the bills. The Ministry of Transport, Public Works and Water Management said in a statement that motorists will be able to choose a provider that provides additional services, such as route navigation.
Vehicles for the disabled vehicles, agricultural tractors, motor vehicles with a limited speed, taxis, classic cars and buses would be exempt. An alternative payment system will be devised for foreign vehicles using Dutch roads.
Proceeds from the mileage tax will not exceed the combined cost of the older taxes, which can be about 25% of the cost of a new car. The proceeds will go directly to the Infrastructure Fund, which supports the building of roads, railways and other infrastructure.
The Ministry said that the government sees mobility as a prerequisite for economic growth and as an achievement which gives people the opportunity to develop themselves and relax. Since the sixties, the number of car kilometers has increased tenfold. The government expects mobility to grow by another 40% by 2020.
(A hat-tip to Stefan!)
Why complicate life so much when a plain equivalent fuel tax + (by exception and if really needed) a registration tax based on vehicle fuel comsuption would do a better job for both locals and outsiders.
A road tax per Km per vehicle penalizes the small vehicles and lets the heavy weight gas guzzlers get away with a comparatively favourable treatment. Fair road usage taxes (if really required) should be based on the vehicle (weight x distance).
Posted by: HarveyD | 14 November 2009 at 11:47 AM
Interesting article.
It seems to be a bit more democratic.
This may have unexpected results. If the government does not care (much) what people drive, who drives, or why they drive, only that they drive less.. then what is the benefit in changing to a small and/or low-emitting car (if we say that heavier/less efficient cars pay for example 50% more)? Higher income people won't even bat an eyelid. Living out in the country, where there is little traffic and large open spaces may become disproportionately expensive. Also, it seems a trivial sum: avg day @ 50km x 0.03Euros = 1.50Euros -- maxing out at a bit over 3Euros/day on that distance in the next 8-9 years. One might wonder whether the cost to administer such a program is even covered under the revenues expected to be received.
Obviously, this is not a punitive vehicle-reduction/CO reduction program as much as it is a tax source scheme.
Posted by: Jer | 14 November 2009 at 12:38 PM
It’s basically a tax scam which ramps up every year to hit everyone. I'd say its been done this way because fuel taxes have already brought pump prices in the Netherlands to eye-watering levels.
The UK has similar fuel tax and fuel price levels and this has led the government to set up Commissions to find as much propaganda (climate change predictably being on the top rung of the excuse agenda) to send back to government to ‘justify’ new taxes on motorists.
For the Netherlands at least, it has a first class highway and public transport network. In the UK, our networks are being brought into the dark ages. So called politically correct measures to re-allocate road space for a transport system that does not work outside London is hardly good policy or value for money that comes out my wallet every time I fill up.
Motorists are easy for tax money, so it’s no wonder that our government is not trusted over transport.
Posted by: Scott | 14 November 2009 at 01:21 PM
This is a Dutch thing and I don't understand.
HarveyD gets it right. This is a flat tax, in effect a sales tax on driving not fuel. It does not discourage driving large and wasteful vehicles.
He is also right about GPS. Why introduce such a complex scheme? That can only benefit police surveilence, and require more public employees.
If the government wants revenue then raise the fuel tax. That requires a few memos, no new public employees, can be done quickly, and discourages fuel consumption.
Many public schemes turn out badly, but very few proposals seem to offer no benefits whatever. At the moment this seems a contender.
Posted by: Ken | 14 November 2009 at 01:44 PM
Two things.
There is a much greater incentive to cheat the system this way by fiddling with the monitoring system. It would also be administratively more complex (and therefore expensive) to operate.
The income from the purchase tax is up-front, whereas the kilometre tax is ongoing. People who don't buy cars very often (the poor) are disadvantaged over those who buy new cars every few years (the rich).
Posted by: Geoff Howat | 14 November 2009 at 04:42 PM
This proposal is similar to a fuel tax in that larger vehicles pay more than smaller ones (read the article). Also, it provides a way to collect road taxes for vehicles which don't use traditional fuels, which vehicles are likely to increase in number as electrification takes hold.
The "Now we know where you are at all times" aspect is a little chilling, I will admit.
Posted by: Nick Lyons | 14 November 2009 at 05:43 PM
Thanks, Nick, for clearing up this issue. For privacy reason, I believe that odometer reading obtained yearly can provide the needed mileage information without revealing where the car has been at different times. This odometer reading can also be broadcasted just like GPS information, or obtained electronically via OBD readout, without increase in cost.
Posted by: Roger Pham | 14 November 2009 at 06:00 PM
Wonder if they'll try to nail folks that are just passing through?
Posted by: Mannstein | 14 November 2009 at 07:15 PM
Makes you want to buy a low CO2 electric car that runs on norwegian hydropower over the new cable just to be taxed more to do it. Tax the lorries for the thousands of times more damage that they do to the roads. ..HG..
Posted by: Henry Gibson | 15 November 2009 at 03:00 AM
I don't know what all the fuss is about. It's actually a fairer way of paying for the roads & their maintenance. Toll roads are similar - the more you drive, the more tolls you pay...this system is more expansive (covers all Dutch roads) & more efficient (no installation of toll booths or electronic toll infrastructure).
Posted by: ejj | 15 November 2009 at 07:04 AM
Road usage taxes or fees must be proportional to wear and damages done.
Heavier vehicles normally burn proportionally more fuel. A fee or tax system based on fuel used (fuel tax) seems to be one of the fair and easy way to collect related revenues. No extra administration on new system required. Every country already has fuel tax. It just has to be adjusted or increased. Simple and effective.
Politicians dont like to face the music and increase fuel taxes. They try to find hidden ways such as increase registgration or service fees or usage fees but it all boils down to raising the fuel (or electricity) taxes.
If many people make their own electricy (home PVs) for their PHEVs and BEVs, then road usage fees may become a neccessity. We are not there yet.
Posted by: HarveyD | 15 November 2009 at 08:00 AM
In such a small country, wouldn't most of the high mileage occur from long trips outside the county?
Road design life and maintenance expense is basically a known. Politicians, mobs, corporations, etc. should submit annual kickback expense figures to government budgeting to avoid the need for such citizen mileage and location tracking systems.
Posted by: kelly | 15 November 2009 at 03:05 PM
You have to remember this is Holland, it is small, wealthy and crowded.
Thus, they would have problems with road congestion and the ability to drive to Germany, Belgium or Luxembourg to buy fuel there.
They must have reckoned that if they increase fuel taxes any more they will start to lose revenue to cross border fuel shopping, to that will limit the maximum practical tax.
Also, the roads are crowded, and they want to reduce this. It doesn't matter whether you are driving a BEV charged by your own personal windmill or a Merc S500, you still occupy roadspace and cause wear and tear, so all road users should pay for this, hence the mileage tax.
+ they might have found that fuel tax revenue were falling as more and more people were buying 40-50 MPG (US) diesels.
The Dutch are a very rational people!
Posted by: mahonj | 15 November 2009 at 04:02 PM
mahonj, you said it!
Congestion is a MAJOR issue in the Netherlands. And I think from a psychological point of view, a per-mile tax keeps people from driving a lot more that fuel-tax. The cost of fuel is linked to a plethora of things, such as geopolitics, other than miles driven. And that weakens the link between fuel price and cost of driving in people's minds, me thinks. And while this policy in isolation does not increase vehicle efficiency it will have a derived effect on consumption of the highly limited fossil oil reserves and CO2 emissions.
Posted by: Thomas Pedersen | 15 November 2009 at 08:23 PM
So far, motorcycles are exempt from all this (for now al least) so i'm not really concerned. Since i do most of my riding on 2 wheels. The car is mostly for grocery getting and for transporting the wife and kids.
So perhaps 5000 km per year by car currently and 20.000 km by motorcycle.
This was portrayed as a way to relieve congestion. But biggest effect will probably be on on the people who drive their own car during of congestion times. I for instance pay 356 euro (484 dollar US) per year on roadtax. That means that in 2012 i can drive for 11.867 km and break even.
People that have a company/ lease car will probably get the tax included in their contribution. So perhaps get a smaller lease car, that's cheaper to lease. Anyway.
Not really sure what the real outcome will be. For me however it will be psoitive.
For example.
A gasoline car weighing between 1251 and 1350 kg (2758 and 2976 lbs) will cost about 612 euro per year, that means in 2012 you can drive for 20.400 km and break even.
Road tax here is based on a car's weight and fuel.
Same car with a diesel engine will cost 1192 euro. so thats 39.733 km to break even. SO having a hevier car will be cheaper. Kind of backwards isn't it.
Besides this we curently have 2 kinds of tax on new car's one is 19% and the other 33%, so thats a lot of tax. And fuel is currently about 1,40 euro/ liter (7.20 us dollar per us gallon!!!) of which about 2/3 (66.7%) is tax already.
Hope to have enlightened you a bitt about our little crowded country.
Posted by: Ing. A.S.Stefanes | 16 November 2009 at 01:00 AM
It is a Sovjet Union communist style taxation that will discourage the Dutch people to travel, while it has nothing to do with wasting fuel.
The Dutch government and civil servants are like a waterhead: it grows and grows, has no intelligence, and costs more and more money. And guess who has to deliver the money?
Posted by: Koen | 16 November 2009 at 02:50 AM
Road tax based on vehicle size and mileage driven yearly is very fair and just, and should be done everywhere, especially in the USA where the sheer amount of petroleum consumed per capita is about the highest in the world! What does the Soviet Union has to do with this?
Posted by: Roger Pham | 16 November 2009 at 04:32 PM
@ Roger
Road Tax is not fair because it taxes ownership, not use.
It wrongly assumes that if you have a bigger car you'll drive it more and hence burn more fuel etc. However, it is more the case these days that people drive smaller cars further because they are more efficient and give more miles for money.
We have two cars in our household that do little mileage and we pay $300 each in road tax, but we need both, as the little mileage that they do travel are often done at the same time (for social purposes etc). During the week they are parked at home. Contrast this to the person with the small car who drives absolutely everywhere because he/she has a "green" car.
As much as I hate to admit it, fuel tax is the fairer system, but then it still has its faults for hurting low income families dispoportionately greater than wealthy people, and also people in more rural areas that have a genuine need to use a car, compared to people in urban areas, some of whom do have the luxury being in walking distance of work of can use public transport. Hence, when it comes to fuel tax there is a question of 'what is fair?', and unfortunately many governments with a green agenda have crossed that line (although the UK stupidly continue its policy of above inflation increases!!)
If the government are going to charge a tax, then make it a showroom tax on the new price of a car - it is a far more sustainable option. It affects those who can most afford it (otherwise they wouldn't buy a new car would they?), eliminate the existing road tax system. This in turn benefits poorer households who need a car to travel. Their choice in size will be determined by the eye-watering prices of fuel. Lets face it, no-one on minimum wage is really going to be stupid enough to buy a car that does less than 40mpg, are they when petrol is nudging $7 per gallon? Let common sense prevail!
Posted by: Scott | 17 November 2009 at 08:28 AM
@Scott,
I agree with you that road tax based merely on car ownership is not fair.
What makes it fair is the taxation based on mileage driven yearly multiply by the weight of the car, like the Dutch government is proposing. Fuel tax is problematic for BEV's and PHEV's to pay a fair share of wear and tear of the roads that depends on fuel tax to repair the roads.
Posted by: Roger Pham | 18 November 2009 at 03:22 PM
There is one thing not mentioned and it is central to the scheme. The km charges will differ on the time of day. Usage during the rush hours is charged more than calmer periods. Were it not for this feature, the govt could have just increased the tax on the fuel.
Posted by: Joe | 19 November 2009 at 08:29 AM