Dutch Are First to Adopt Pay-Per-Mile Driving Taxes to Cut CO2, Reduce Oil Use

Dutch Are First to Adopt Pay-Per-Mile Driving Taxes to Cut CO2, Reduce Oil Use

By John O'Dell November 19, 2009

Idea Also Is Kicking Around in U.S, at State and Federal Levels

It's been tested in Oregon, pondered in California, Florida, Maine and several other states, applauded in D.C. by the House Transportation Committee, and now pay-per-mile vehicle taxing is becoming a national reality - in the Netherlands.

Yup, the Dutch government has approved a plan to drop vehicle sales and registration taxes and replace them with a tax on every mile - or kilometer, in this case - a car or truck is driven.

The tax also would be variable, based on a vehicle's fuel efficiency and even the time of day the driving takes place.

The variations can be significant - basic tax for a small Renault Twingo will be 1.4 euro-cents per kilometer - that would be 1.4 euros for 100 kilometers ($2.09 for 62 miles), while a powerful Audi A8 would be taxed at about 16.6 euros ($24.76) for the same trip.

That's on top of the Netherlands' $3.50 per gallon gasoline tax and 19 percent value added tax on the total gas purchase.

Boost for EVs?

It is aimed at raising revenue while reducing greenhouse gas emissions and oil consumption by making it more economical to buy the most efficient vehicles and then drive them less often, especially during the morning and evening rush hours.

We're no fan of such taxes - we drive a lot, as do most in the U.S., where average annual passenger car mileage is around 25 percent greater than in Europe - but one benefit for the green movement is that if rates are based on fuel economy as in the Netherlands, they should encourage use of pubic transit and the purchase and use of electric vehicles, which are likely to be taxed at the lowest rates.

The Dutch government expects to see a 15 percent drop in traffic volume, a 7 percent dip in traffic fatalities and the same level of income as today, when it is charging a 40 percent sales tax on new car purchases.

The program, which means that every car will be equipped with a GPS unit so its mileage can be tracked and recorded by the tax collector, will begin in 2012 and be fully implemented by 2017.

Privacy Issues

In the U.S. proponents of pay-per-mile taxing have met stiff opposition from critics who say it is an invasion of privacy for the government to track individual mileage via vehicle-installed GPS systems.

Auto industry executives and many others are instead calling for an increase in gasoline taxes - something the Europeans have trouble doing at this stage of the game because they've been doing it for decades until gasoline in most western European countries is in the range of $6 to $8 per gallon.

Boosting the artificially low 18.4-cents per gallon federal gas tax would serve some of the same purposes - pressuring people to drive the most fuel-efficient vehicles chief among them.

Any loss of revenue as people cut back on their driving because of higher fuel costs would be compensated for by the reduced wear and tear that less driving would mean for on our gas-tax funded highways.

U.S. Mileage Tax Study Proposed

We also are concerned that the U.S. would adopt a flat VMT - vehicle mileage tax - that wouldn't account for differences in fuel economy.

In fact, a bill that would seem to be setting us up for just such a system, HR 3311, is now awaiting action in the House technology and innovation subcommittee.

It would set up pilot program to study alternatives to the gas tax, including a vehicle mileage tax, and we see no language in the measure that would recognize and account for differences in vehicle fuel economy.

Rather than encouraging green car development, a flat VMT that charges a Hummer the same as a Prius for a 100-mile trip would be a huge blow to development of alternative fuels and highly efficient vehicles such as plug-in hybrids and all-electric cars and trucks.

John O'Dell:  is an AutoObserver Senior Editor. Follow @AutoObserver on Twitter.