Traffic sucks. It is a waste of time and of fuel. But even though we have congestion problems of our own in America, it is nothing like the Netherlands, where an estimated 70 million hours a year are wasted by the populace stuck in traffic. The problem is so bad that in 2012 a new law goes in effect in the Netherlands that will tax drivers based on how many kilometers they drive. As Europe’s most densely populated and congested country, Dutch politicians hope a hefty tax levied against most drivers will encourage people to use public transportation and lessen their legendary congestion problems.
Here is the caveat that caught my eye though. Dutch officials estimate that 6 out of 10 motorists will end up paying less, because the new tax will replace registration and the 25% (!!!!!!!!!) sales tax on new cars. So why would people drive less, if it costs less?
The Netherlands has a serious, serious congestion problem. It has 16.5 million people crammed into a country of about 16,000 square miles, which isn’t much bigger than Maryland (especially if you only count landmass). During rush hour, the government estimates there is an average of 270 km of traffic jams, though TomTom GPS estimates it can be as much as 1,000 km. Of traffic. That just sounds terrifying. So, obviously, something has to be done.
The law was passed by the Dutch cabinet in November and calls for every motorist to install a GPS device in their vehicle. Starting in 2012, drivers will be charged 3 Euro cents (7 US cents) per km driven, and slowly increasing to 6.7 Euro cents (16 US cents) per km by 2018. A 250 km drive would then cost, on average, about $10.75 in current US bucks. The law also makes provisions for people who drive gas-guzzlers, charging them more, while exempting buses, taxis, and classic cars. The fee will also increase during peak traffic hours to encourage carpooling and public transportation, and the Dutch expect up to a 15% reduction in traffic. Personally, I expect a niche group would go out and start scooping up antiques to drive daily rather than pay the tax. I know I would.
The Dutch are well known for bicycling, but apparently aren’t very fond of public transportation. Officials have tried everything, from upping speed limits, to adding rush hour lanes, and even offering free croissants and newspapers to people taking the bus. But even that hasn’t been enough incentive to reduce traffic, and if you stretched out all the traffic jams back to back in the Netherlands during a single year, you could get to the moon.
But if it will really cost 6 out of 10 drivers less money, will it actually clear out traffic? True, if you have a ticker on your dashboard counting out how much you owe (paying once per month), it might make for an incentive to drive less. But for the frugal minded, there are always ways around these sorts of things.
I also seriously doubt something like this could be implemented in the US without some serious privacy issues, though some European countries are also considering a mileage tax in place of the city congestion fees that do nothing but irritate an already heavily taxed populace. We also have a much, much larger (and hillier) country, though states like Oregon have been mulling over the idea for a while now. Do you all think it could work here? Or would you be like me, and fire up that old jalopy and stick it to The Man?
Source: Time Magazine | Radio Netherlands | Image: Radio Netherlands
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About Christopher DeMorro
Many Cars Drive Short Distances
While cheaper for 6 out of 10 motorists, it still makes sense that this scheme can drastically reduce traffic congestion. I have not searched for any Dutch government documents numerically explaining it, but I am Dutch and have a reasonable understanding of the costs of car ownership and public / private transportation in the Netherlands.
In the Netherlands, using public transportation is stimulated via subsidies. Driving a car is made expensive on purpose, by a combination of taxes on car sales, fuel, “road tax” (comparable to US registration tax) on top of the regular high tear (19%) ATV (Added Value Tax). While diesel fuel is taxed lowest resulting in diesel being the lowest cost fuel (to not penalize commercial trucks too much) the “road tax” is highest for diesel cars and even a function of vehicle weight and is typically between thousand and two thousand Euros per year (for Honda Accord Diesel = ~ 1300 Euro or $ 1900 / year).
Most middle class families have one or two cars. For the case of two cars, one is typically driven a lot (like to work) and the other much less or very little (local errands), mostly since that driver normally takes public transport to work.
Except for the fuel tax, all these taxes are fixed and thus independent of km driven and people who drive little hence paid a huge “tax per km”. While people who drive most pay the lowest taxes / km. Consequently, people who drive a lot, drive a diesel car and have lower variable cost / km than those with gasoline cars who drive less. So far there was no incentive for the high mileage drivers to drive less.
Hence a km dependant tax system will now (for the first time) create an incentive for those long distance car commuters to now start using the extensive public transport system or to car pool. Those who drive cars mainly for local errands will not start running much more errands “because” their yearly (fixed) road tax got slashed. Even stronger, even this group may now replace their car over time by a smaller one (lower gas costs and lower tax/km) and try to not drive during peak hours (again lower tax/km).
I do expect that due to the lower cost of ownership many people who so far found the cost of owning a car just too high will now buy a car, but this group is mileage wise likely to remain at the bottom of the “yearly miles driven” distribution.
Classic cars don’t have the better gas mileage (important at ~ Euro 1.40 / L or ~ $ 8.00 / gal. or the safety features of newer cars (important due to the more aggressive behavior of Dutch drivers compared to those in for example NYC). Even so, there are only so many classic cars around and this will not be a growing group.
Yes, I think that this new tax system has a very good chance of reducing traffic congestion, at least for a while. They will have to keep increasing the tax/km to keep it effective.
Vincent Dert
Many Cars Drive Short Distances
While cheaper for 6 out of 10 motorists, it still makes sense that this scheme can drastically reduce traffic congestion. I have not searched for any Dutch government documents numerically explaining it, but I am Dutch and have a reasonable understanding of the costs of car ownership and public / private transportation in the Netherlands.
In the Netherlands, using public transportation is stimulated via subsidies. Driving a car is made expensive on purpose, by a combination of taxes on car sales, fuel, “road tax” (comparable to US registration tax) on top of the regular high tear (19%) ATV (Added Value Tax). While diesel fuel is taxed lowest resulting in diesel being the lowest cost fuel (to not penalize commercial trucks too much) the “road tax” is highest for diesel cars and even a function of vehicle weight and is typically between thousand and two thousand Euros per year (for Honda Accord Diesel = ~ 1300 Euro or $ 1900 / year).
Most middle class families have one or two cars. For the case of two cars, one is typically driven a lot (like to work) and the other much less or very little (local errands), mostly since that driver normally takes public transport to work.
Except for the fuel tax, all these taxes are fixed and thus independent of km driven and people who drive little hence paid a huge “tax per km”. While people who drive most pay the lowest taxes / km. Consequently, people who drive a lot, drive a diesel car and have lower variable cost / km than those with gasoline cars who drive less. So far there was no incentive for the high mileage drivers to drive less.
Hence a km dependant tax system will now (for the first time) create an incentive for those long distance car commuters to now start using the extensive public transport system or to car pool. Those who drive cars mainly for local errands will not start running much more errands “because” their yearly (fixed) road tax got slashed. Even stronger, even this group may now replace their car over time by a smaller one (lower gas costs and lower tax/km) and try to not drive during peak hours (again lower tax/km).
I do expect that due to the lower cost of ownership many people who so far found the cost of owning a car just too high will now buy a car, but this group is mileage wise likely to remain at the bottom of the “yearly miles driven” distribution.
Classic cars don’t have the better gas mileage (important at ~ Euro 1.40 / L or ~ $ 8.00 / gal. or the safety features of newer cars (important due to the more aggressive behavior of Dutch drivers compared to those in for example NYC). Even so, there are only so many classic cars around and this will not be a growing group.
Yes, I think that this new tax system has a very good chance of reducing traffic congestion, at least for a while. They will have to keep increasing the tax/km to keep it effective.
Vincent Dert
Many Cars Drive Short Distances
While cheaper for 6 out of 10 motorists, it still makes sense that this scheme can drastically reduce traffic congestion. I have not searched for any Dutch government documents numerically explaining it, but I am Dutch and have a reasonable understanding of the costs of car ownership and public / private transportation in the Netherlands.
In the Netherlands, using public transportation is stimulated via subsidies. Driving a car is made expensive on purpose, by a combination of taxes on car sales, fuel, “road tax” (comparable to US registration tax) on top of the regular high tear (19%) ATV (Added Value Tax). While diesel fuel is taxed lowest resulting in diesel being the lowest cost fuel (to not penalize commercial trucks too much) the “road tax” is highest for diesel cars and even a function of vehicle weight and is typically between thousand and two thousand Euros per year (for Honda Accord Diesel = ~ 1300 Euro or $ 1900 / year).
Most middle class families have one or two cars. For the case of two cars, one is typically driven a lot (like to work) and the other much less or very little (local errands), mostly since that driver normally takes public transport to work.
Except for the fuel tax, all these taxes are fixed and thus independent of km driven and people who drive little hence paid a huge “tax per km”. While people who drive most pay the lowest taxes / km. Consequently, people who drive a lot, drive a diesel car and have lower variable cost / km than those with gasoline cars who drive less. So far there was no incentive for the high mileage drivers to drive less.
Hence a km dependant tax system will now (for the first time) create an incentive for those long distance car commuters to now start using the extensive public transport system or to car pool. Those who drive cars mainly for local errands will not start running much more errands “because” their yearly (fixed) road tax got slashed. Even stronger, even this group may now replace their car over time by a smaller one (lower gas costs and lower tax/km) and try to not drive during peak hours (again lower tax/km).
I do expect that due to the lower cost of ownership many people who so far found the cost of owning a car just too high will now buy a car, but this group is mileage wise likely to remain at the bottom of the “yearly miles driven” distribution.
Classic cars don’t have the better gas mileage (important at ~ Euro 1.40 / L or ~ $ 8.00 / gal. or the safety features of newer cars (important due to the more aggressive behavior of Dutch drivers compared to those in for example NYC). Even so, there are only so many classic cars around and this will not be a growing group.
Yes, I think that this new tax system has a very good chance of reducing traffic congestion, at least for a while. They will have to keep increasing the tax/km to keep it effective.
Vincent Dert
Hey Vincent, thank’s for chiming in. I had no idea you guys had THAT many taxes!
Hey Vincent, thank’s for chiming in. I had no idea you guys had THAT many taxes!
Hey Vincent, thank’s for chiming in. I had no idea you guys had THAT many taxes!
The exchange rate you used is close to $2.40 per 1 Euro, which is definitely not right. Over the last 12 months, the exchange rate peaked at around $1.50 per Euro.
The exchange rate you used is close to $2.40 per 1 Euro, which is definitely not right. Over the last 12 months, the exchange rate peaked at around $1.50 per Euro.
This makes no sense. Installing GPS systems in every car is an incredible invasion of privacy.
It is much easier to just have a tax per litre of fuel, like we do in Portugal. The present fuel tax is 39 euro cents for Diesel and 59 euro cents for gasoline. I think the reason for the difference is to help business, seeing that almost 100% of business vehicles are Diesel-powered (I’m not talking only about the transportation business).
Tax per litre. The more you use, the more you pay. Drive less, pay less. Simple. No GPS or “big brother” required!
This makes no sense. Installing GPS systems in every car is an incredible invasion of privacy.
It is much easier to just have a tax per litre of fuel, like we do in Portugal. The present fuel tax is 39 euro cents for Diesel and 59 euro cents for gasoline. I think the reason for the difference is to help business, seeing that almost 100% of business vehicles are Diesel-powered (I’m not talking only about the transportation business).
Tax per litre. The more you use, the more you pay. Drive less, pay less. Simple. No GPS or “big brother” required!
This makes no sense. Installing GPS systems in every car is an incredible invasion of privacy.
It is much easier to just have a tax per litre of fuel, like we do in Portugal. The present fuel tax is 39 euro cents for Diesel and 59 euro cents for gasoline. I think the reason for the difference is to help business, seeing that almost 100% of business vehicles are Diesel-powered (I’m not talking only about the transportation business).
Tax per litre. The more you use, the more you pay. Drive less, pay less. Simple. No GPS or “big brother” required!