Netherlands To Radically Reform Road Tax System

by Ulrika Lomas, Tax-News.com, Brussels

17 November 2009

In a bid to combat climate change, the Dutch government has unveiled plans to radically reform the country’s existing system of road tax.

Following years of political debate, the government has finally decided to implement a brand new tax initiative, designed to reduce both the level of carbon dioxide emissions and the number of traffic jams.

From 2012, the country’s traditional system of road tax will be abolished and replaced by a new pay-as-you-drive system. Car owners will pay 3 cents for every kilometer traveled. The charge will be increased progressively, rising to 6.7 cents by 2018.

The scheme is designed to encourage car owners to leave their cars at home, and to use public forms of transport, or to cycle or walk instead.

According to the Dutch Transport Minister Camiel Eurlings, the introduction of the new system will serve to reduce the level of carbon dioxide emissions by around 10%, and to reduce the annual number of road fatalities by 7%. The government also believes that the new system will reduce the total number of kilometers traveled by car by 15%, and that by 2020 the number of traffic jams will return to the 1992 level.

In order to determine the cost for drivers, all Dutch cars will be fitted with a specially designed GPS system to calculate the total number of kilometers traveled and to then transfer the information to a central payment office.

Despite the government’s recent announcement, the Green Party is insisting that the proposed reform does not go far enough to address the issue of climate protection, and must therefore only be regarded as a first step.

The Liberal and Socialist parties have also criticized the government’s plans, adamant that the new system will merely lead to an increase in costs for drivers.

Eurlings has confirmed, however, that 59% of drivers are due to benefit from the new system, 25% of drivers will see no change in their road tax contributions, and only 16% of drivers will see a rise in costs.

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