Tuesday 17 November 2009

Paying to use cars, not to own them

The Netherlands is soon to be the first place in Europe to tax people's use of cars rather than ownership. The expectation is that six to ten percent fewer car journeys will mean that traffic deaths will fall by about the same percentage, saving twenty to forty lives a year in the country which already has the world's safest roads.

The scheme, called the "kilometerheffing" (simply "kilometer charge"), boils down to a GPS system in cars which will record how much they are driven, where and when. The intention is that driving on busy roads in the rush hour will cost more than driving on less busy roads at other times. It is intended to be a revenue neutral change to the tax on motorists, so that 60% of drivers will see their costs drop. Of course, if people drive less, the overall amount of tax paid to the government by drivers will drop. The proposal is nevertheless a bit controversial with some drivers, especially those who drive long distances at present.

There are also advantages in reduction of traffic jams and CO2 emissions.

Car ownership in the Netherlands is already lower than it might have been due to policies which make alternatives more attractive. It's difficult to know whether this will result in more or fewer people owning cars, but it should certainly help to increase the cycling rate in what is already the world's top cycling nation.

The Fietsberaad expect cycle usage to grow by 10% due to the kilometerheffing.

It didn't pass. The Netherlands is still waiting or the kilometerheffing. However, so far as cycling is concerned, carrots are more important than sticks.

It's also covered here and here


  1. While I like the idea of charging for car use, I am not a fan of this kind of charging - mostly because of the privacy issues. Any GPS based system has privacy issues (fears if not actual issues). I am surprised the Dutch would accept that sort of invasion of privacy.

    But it is good they are working to discourage car use.

    Any idea why not fuel duty and congestion charging?

  2. Neil: Fuel duty and congestion charging were too simple obviously. This is the next concept in a row for over 20 years and like its predecessors it is doomed to fail. The cost is enormous, the system's complexity ditto, the government has a history of failing at this kind of projects, parliament hasn't had a chance to look the plans over, and car users are beginning to understand that they will be under constant supervision and have to pay a lot more than before. Finally, David hasn't quite understood that he's the one who is also going to pay for this nightmare; until now only drivers paid for the use of roads but to cover the cost a general extra tax, some kind of poll tax, will be levied. There will be elections shortly so it remains to be seen what the outcome will be.

  3. Neil, new technology is emerging whereby you can charge using GPS systems without invading privacy. Here in Toronto we have a startup company called "Skymeter Corp" who has build such a device.

    Conforming to privacy laws, it keeps all of the GPS logs on the device itself - the data will never leave the device. The device will then calculate the charge and will use cellular signals to send the cost to bill the client (as opposed to sending the GPS logs).

    The devices apparently are tamper proof and can detect if they have been compromised.

    This system can also be used to pay for parking and for pay-per-use insurance.

    It's still new technology but the possibilities it presents are profound.

    I am not affiliated with the company, but I have been in touch with the founder to see how the technology can be used here in Toronto to reduce congestion and to fund better bicycling infrastructure.

  4. When I heard this on the news yesterday I thought 'good idea', but then on reflection, I think actually fuel tax is a better option: it is much easier to collect and doesn't have any privacy issues; it directly reflects the efficiency of the vehicle; and also the driver's driving for economy. It isn't quite so "in your face", in that it is absorbed in the price - but that could be dealt with; and of course it is too low to reflect the environmental and social damage. In the UK though, if anyone were to try to put up prices substantially or indeed propose a separate tax, it would be a sure fire election loser, orchestrated by the daily Mail no doubt, who don't give a damn about burning up the earth.

  5. Frits: I guess you'll be one of those voting against. Fair enough. This is a democracy, after all. From my point of view, I hope the Dutch public get behind this, but perhaps they will not.

    I remain hopeful about this scheme. Not because I think it will be magically trouble free, but because of the potential for a lot of benefits.

    Relative to Britain, the government here are quite amazingly efficient. It gives me hope that if any country can make this work, the Netherlands stands a very good chance in doing so.

    The threat of a tax doesn't worry me much. It's not part of the plans, and I don't see that it has to become so. There will be costs due to setting the system up and maintaining it, but if successful the kilometerheffing also gives the government a chance to make savings - for instance in the huge costs of road construction and maintenance.

  6. David: I agree that simple would be better. However, the kilometerheffing is supposed to help to solve problems of congestion on roads by having rates which vary depending on where and when you drive. A fuel tax obviously couldn't do this.

    Also, a problem with just having a higher fuel tax here is that the Netherlands is not an island. People can drive to Germany or Belgium to fill up. If the price was considerably different, I suspect this might become quite common, and possibly it would could generate a whole new industry of smuggling fuel, and people might even stockpile cheap fuel at home - which is a considerable danger.

    It is unfortunate that the "fuel price escalator" failed in the UK, as it's somewhere that this could have worked. However, I think it was inevitable that it did fail as the average motorist saw no reasonable alternative to driving. Public transport is expensive and crowded in the UK and cycling isn't attractive.

    As public transport is very much cheaper here, and cycling is already an attractive option, it should be easier to introduce this scheme than in the UK.

  7. David, the fuel tax will become useless in the near future when electric cars become a reality.

    This would be a positive step for the environment, but you still need to pay for the roads. Governments will need to find a better way to raise funding for roads in the post fuel-tax era.

  8. David H: Voting against it is not an option, parliament will have the last say. What I'm most concerned about is the horrible track record of Dutch government when it comes to big projects. Always needlessly complicated, always way over time and always at least twice as expensive as planned. Look at the Betuwelijn, the high speed train, the North/South metro in Amsterdam, the problems with Belastingdienst (in English?). Even now the minister may have announced this plan but you may have noted that it will be up to the next government to implement it. If the new political situation allows it ...

    As for personal reasons, I ditched my last car 30 years ago, don't have a driving licence anymore. I simply chose to live at a distance of 10 minutes walking to my workplace. Compact towns can be a boon. And I also don't ride a bicycle, maybe again after the fourth round of eye surgery next year. Any road is far too dangerous at the moment.

  9. I read about it in our newspaper. Sounds like a very interesting concept. Our car lobbies dislike the idea though (of course). I haven't thought it through myself, but it would certainly make sense to give it a go and see how it works. Keep us updated :).

  10. I do cycle a lot, I do think that cycling must be promoted, and I do appreciate that people should be encouraged to use their cars only when there is really no other possibility. However I sincerely hope that the Dutch parliament or public will stop this massive attack on people's privacy before it sets a bad example for other countries. (Yes, I acknowledge that in principle it needn't offend privacy, but I am certain that it will not take a long time until someone yields to the temptation to tap the data.)

  11. Thank you for the interesting post and discussion.

    Could someone help me to understand the privacy objection to this method of taxation a little better?

    I understand that the government would have records of all travel behavior undertaken by car. This initially sounds threatening, but it's not clear to me where the expectation of privacy comes from for the use of public space (roads). Clearly, behavior on public rights of way is not entitled to the same level of privacy as behavior in a private home.

    But I'm no lawyer and there's probably more to it. I'm just looking to understand the concern better.

  12. The more I read about *laws* coming through in NL, the more I find I am glad to not live there any longer. There is no place in the world more bike friendly - I love that. But not this invasion of privacy. I understand wanting to reduce car usage and fuel consumption, pollution...but this goes too far.

  13. It's interesting how many concerns there are about privacy. In this case we're talking about something you can opt into and opt out of. Drive, or don't drive. There are plenty of alternatives to driving.

    If you really want to see invasion of privacy on a huge scale, it's the UK you need to look at. That's where it's being made a condition of getting a license that pubs must video their customers and where phone taps take place at a rate of one per minute.

  14. "it keeps all of the GPS logs on the device itself - the data will never leave the device" - That may allay the privacy concerns, of course if may not be believed, and there would still be fears the government/police would have access to the data on the device itself. But I agree that may be enough to sway enough of the public.

    I think GPS data of exactly where you have been, and when, is very, very different to video surveillance and even ANPR congestion charging.

  15. Neil, it's not terribly different from the data that already results from carrying a mobile phone around.

    You can opt out. Don't drive and don't use a mobile phone (but to be sure with mobile phones you need to remove the battery. Yes, I know it sounds a bit "tinfoil hat", but it's true).

  16. The purpose of this plan is to tax driving according to road type, time and distance, in order to reduce the enormous tailbacks that are caused every day by the inadequacy of the road network. Apart from that, the type of car and fuel will be part of the calculation. Critics expect, however, that people will avoid the expensive motorways and will use secondary roads which will then also become clogged. What will happen next is that those secondary roads will get the same price tag as motorways; all it needs is a small change in software. In the same vein towns can request an upgrade of busy streets. In short, there is no end to the levies that can be applied. On the other hand, the new system will replace the existing taxes on owning and buying a car. These are high, so cars will become essentially a lot more affordable. It's expected that many people who do not own a car now, will buy one, and the number of second cars will also grow. They may not be driven much but still need space to be parked - mostly on the street.

    As for the privacy issue, while it may be true that cell phones also tell where you have been, they can be switched off. The car "black box" cannot which most people don't like much. The minister for Transport has assured us that the box will only transmit the mileage data but no government has ever shrunk back from checking when it could. We have heard people from the former DDR tell us that the very idea is like the Stasi resurrected. There is no reasonable answer to gut feelings.

    There is another problem. The system will be GPS based. GPS is owned and run by the American military, at great cost. If it ever breaks down road use is suddenly free, and if the Americans - who are having a hard time themselves - decide to charge the government for the use of their system there is no telling what the price will be. There is a European system Galileo but that isn't ready for a long time to come.

    In short, if road use must be discouraged the simplest way would be to increase the fuel tax, or introduce a motorway toll. For some reason the government has chosen a far more complicated solution. The first concepts date back to 1972!

  17. Wouldn't the same be easier to do by taking the year to year mileage during the yearly vehicle inspection? (of course I'm assuming yearly emissions inspections in NL)

  18. Anon: The intention is to charge motorists more for use of crowded roads and for driving at rush hour than for use of quieter roads and at the weekend. This can't be done by looking merely at the distance a car has travelled during the year.