NETHERLANDS: DRIVING ON WITH NEW PAY-PER-KILOMETER ROAD

UNCLAS THE HAGUE 000310 SENSITIVE SIPDIS STATE FOR EEB/TRA/OTP AND EUR/ERA E.O. 12958: N/A TAGS: EAIR ECON ETRD SENV EU NL SUBJECT: NETHERLANDS: DRIVING ON WITH NEW PAY-PER-KILOMETER ROAD PRICING SYSTEM ¶1. (U) Summary: The Dutch government has delayed the first stage of its proposed road pricing system until 2012 at the earliest. This new system would replace fixed automobile taxes with a pay-per-kilometer system. Despite the delay, Parliament still looks poised to pass the new system into law by the end of this summer, and according to Ministry contacts, this should help to ensure the new system will become a reality for all drivers - contrary to a mostly skeptical public - around 2017. End Summary. -------------- BACKGROUND -------------- ¶2. (U) Traffic congestion is a major problem in the Netherlands, especially in the Randstad area (cities of Amsterdam, The Hague, Rotterdam, and Utrecht). Many previous Dutch governments have debated how best to address this issue, but attempts to come up with a solution have failed for various political reasons. In 2004, under the Balkenende III cabinet, the government issued a new policy document, outlining a vision for a new "reliable mobility system" that improves overall accessibility. Following the formation of the Balkenende IV cabinet, momentum culminated in a new 2006 policy document that was formally adopted by Parliament, endorsing the establishment of a new road pricing system within the time frame of the current government (by 2011). -------------- NEW APPROACH -------------- ¶3. (U) The proposed system would not only alleviate congestion but also improve the environment. Its aim would be to tax car usage, not car ownership. The current fixed automobile taxes, the vehicle purchase tax (BPM) and the motor vehicle tax (MRB),would be replaced with a pay-per-kilometer system that taxed drivers based on specific distances driven, the time of day driven, and the vehicle's environmental components. A more fuel efficient car driven during non-rush hours would be taxed less over the same distance driven than a gas-guzzler commuting during peak hours. Revenues resulting from the new system would be invested back into infrastructure, mainly road but also rail, projects, as the BPM and MRB fixed taxes currently go to the treasury general fund. While some would pay more, by design, the intent is that the system would not cost more cumulatively for drivers, and the operating cost for the government should not exceed five percent of the total revenues. Many technical questions remained on actual implementation, such as how would the kilometers be measured and the drivers billed, but the government hoped these would be resolved through advances in technology and the tender process. -------------- DELAY -------------- ¶4. (U) On April 7, Dutch Transport Minister Clemens Eurlings (Christian Democrat, CDA) in a letter to Parliament announced that it would be "irresponsible" of the government to implement the first stage of the new system, for commercial vehicles, by the end of ¶2011. Eurlings did not provide much detail into his decision, other than to describe the project as "complex," which requires care instead of sticking to political time lines. While the announced delay did not shock the public, considering road pricing has been under consideration for decades, Eurlings did receive some political heat from opposition parties for failing to stick to the deadline in the 2006 policy document. -------------- DRIVING ON -------------- ¶5. (U) Econoff met with Dutch Transport Ministry road pricing Q5. (U) Econoff met with Dutch Transport Ministry road pricing project official Nanette Kistemaker on May 8, who described the system as the first of its kind in Europe. Whereas Switzerland, Germany, and Austria have similar pay-per-kilometer systems in place for trucks, the Netherlands would be the first to implement the system for all passenger vehicles. This is attracting attention from other EU countries, such as Denmark, looking to reform their vehicle tax regime. To those doubting whether the new road pricing system will become a reality, Kistemaker was quick to point out that it represents the largest active project in the ministry in terms of both budget and personnel, and one of the only current government projects continuing to take on new employees - even following the April 7 announcement. Econoff raised privacy concerns surrounding the system's perceived ability to track a driver's whereabouts at all times, as expressed by the Dutch Data Protection Authority. Kistemaker claimed it was not a big political issue with the public. Instead, the ministry was hearing more anxiety about the actual costs, and until a timetable is published outlining the tariff scheme in detail so that people know exactly how much they will have to pay, she acknowledged the system is likely to remain unpopular with the public. -------------- A REALITY -------------- ¶6. (U) Kistemaker said there remains broad political support in the Parliament to pass the new system into law by the end of this summer. Should this be the case, Kistemaker believes the pay-per-kilometer system will become a reality. She also argued that the intent of the announced delay was simply to admit that the project is complicated, not least because the government received around 47 bids, including from vendors outside the Netherlands, in response to its tender offer. According to Kistemaker, the private sector is working in conjunction with the ministry to develop the technical specifications of the system that include separate technologies for on board equipment, billing, enforcement, and validation. The ministry hoped to test the first phase of the system, for trucks only, in 2012, and then aim to have the entire system on-line for every passenger car operating in the Netherlands by 2017. In principle, this includes foreign cars operating in the Netherlands, although the ministry admits the technical and financial feasibility of imposing this on third party drivers still needs to be addressed. Foreign truck drivers already pay road taxes in the Netherlands through the Euro vignette system, which would be incorporated into the new road pricing system. -------------- COMMENT -------------- ¶7. (SBU) The announced delay suggests that the government is finding the new system far more challenging to implement than originally anticipated. The government hopes emerging technology will address the difficult technical issues. A technological solution may emerge when the winner from the 47 bids is announced. The delay has only reinforced an already skeptical public that has heard politicians speak about a new system for decades. In light of previously announced delays of other vaunted transport projects, such as the national public transport card and the expansion of the Amsterdam metro, the pessimistic public does not believe that the complex technical problems can be resolved, that the system will be cost-neutral for the drivers, or that the operating costs can be kept under five percent. GALLAGHER