Sunday, November 15, 2009

The Netherlands To Switch From Road Tax To Mileage Tax On Motorists Effective In 2012, Little Public Resistance Expected

On November 14th, 2009, the Provo Daily Herald published an interesting story on an impending change in taxation on motorists in the Netherlands. Instead of paying a fixed annual road tax, which now totals more than $900 per year for a typical mid-sized car, Dutch drivers will be paying a mileage tax, specifically referred to as a kilometer tax.

European media stories from Deutsche Welle and the Guardian.

The methodology is simple. Each vehicle will be equipped with a GPS device which will track the time, hour and place to which the vehicle travels, and then send the data to a billing agency, which in turn will send the vehicle owner a monthly bill. The government claims that the GPS data would be "legally and technically protected," and it would not be accessible to the government for other purposes. When the plan takes effect in 2012, it will not only replace the annual road tax, but also the initial purchase tax on a vehicle. This is expected to result in the price of a new car dropping by as much as 25 percent.

It is anticipated that the mileage tax on an average passenger car will be $0.07 per mile, with higher charges levied during rush hour and for traveling on congested roads. Every vehicle type will have a base rate, which depends on its size, weight and carbon dioxide emissions. Trucks, commercial vehicles and bigger cars emitting more carbon dioxide will be assessed at a higher rate. Vehicles used for public transportation will be exempt from the mileage tax.

Popular resistance to this change is expected to be negligible, although one Dutch citizen already wrote a letter complaining to Lew Rockwell, primarily because Dutch officials estimate that six out of 10 drivers would pay less annually than under the present system, while tax revenues would remain the same. Justification cited for the change includes excessive and widespread traffic jams as well as excessive carbon emissions. The Netherlands is also one of the most densely populated countries on the face of the Earth.

Analysis: While I personally oppose mileage taxes, this could work in the Netherlands because drivers aren't being asked to pay a new tax, but instead are simply being asked to pay the current road tax a different way. They are already accustomed to the concept. However, here in the States, we are not accustomed to paying a mileage tax, and are much more sensitive about having our movements constantly and involuntarily tracked by a GPS device, so I don't expect such a scheme here anytime in the near future. At least I hope not. The mere thought of just tolling the proposed Mountain View Corridor triggered an outcry of protest.

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