Dutch pledge to scrap road taxes in favour of distance-based plan

By Michael Steen in Amsterdam and Robert Wright in London
Published: 14 November 2009

The Netherlands last night became the first sizeable economy to promise to scrap all road and vehicle taxes and replace them with charges based on the distance driven in a scheme that may become a model for other countries. Camiel Eurlings, the transport minister, predicted that the system, to be introduced by 2012, would cut the total kilometres driven in the country by 15 per cent and CO 2 emissions by 10 per cent. While cities such as London have introduced congestion charges and Germany and Austria operate road-pricing systems for heavy-goods vehicles, only the island state of Singapore has a blanket road-pricing scheme in place.

The UK committed itself in July 2004 to introducing a national road-user charging system but Lord Adonis, transport secretary, made clear this year that that idea had now been dropped. The Dutch say the system, rather than increasing the total tax take from drivers, will raise the same amount of revenue while shifting journeys to less congested routes and times, and public transport. "This is not a milking machine," Mr Eurlings said. "The state won't get rich from it." The government estimates that it will cost 59 per cent of drivers less to pay by the kilometre than they are currently charged in road and vehicle taxes.

Transport economists almost universally support some form of direct charging for road use because it can give price signals to motorists to avoid the most congested roads at the busiest times. The Dutch scheme could provide a model for the other developed countries struggling with the impact of increased fuel efficiency in motor vehicles on the fuel taxes that are currently the main means of charging for road use. Such falls have encouraged drivers in many countries to drive more, increasing congestion and damage to road surfaces.

The Dutch system will work by installing satellite-tracking devices in cars in order to measure the distances they drive and the time of day when roads are used, allowing for variable pricing at peak times in particularly congested areas. But getting the technology right could prove challenging. Germany's truck-charging scheme was delayed as the GPS system that it chose became confused by tall buildings.

Foto: Groningen, Holanda