The envisaged Dutch road pricing scheme compared

In 2001, the Oregon State Legislature instated the Road User Fee Task Force to examine alternatives to Oregon’s gas tax revenues. Gas taxes will soon become a declining revenue source and the State wants to ascertain the flow of revenue that pays for maintenance and improvement of the state, county and city highway and road system.

The new system had to be funded through user pay methods, acceptable and visible to the public. The task force reviewed 28 options and decided on a user-based, mileage-based charge: fair, simple and affordable.

Oregon Mileage Fee concept
The Oregon Department of Transportation started a one-year pilot programme in Portland in spring 2006. Two gas stations and three hundred vehicles tried out all aspects of the Oregon Mileage Fee concept: equipping vehicles with on-board units using GPS (or another location finding device) to accumulate travel data; wiring fuel pumps to read the travel data; programming gas stations’ sale systems to deduct the gas tax from the bill and add the road use fee; and a ‘true-up system’ between the fuel distributors who pay the fuel taxes and the revenue raisers to cover the difference between taxes paid on the fuel at the wholesale level and the road use charge revenues.

In the various systems examined in the Netherlands, more conventional revenue collecting systems were proposed, for example one using old fashioned invoices being sent to users on a monthly basis.

Final report
The final report on the Oregon trial was published in November 2007. Although the prototype technology needs refining for statewide commercial use, the system proved viable as a revenue collection system to replace the gas tax and pay for the necessary road work.

Vehicle taxes
By pricing roads directly and making road service providers directly dependent on the fees (as are most toll authorities), a market mechanism can be created to generate revenues and allocate investments to the most urgent road needs. This is part of the Oregon system. This eliminates the political and bureaucratic layer between road users and road providers. Without that layer, mediocre road service and maintentance at high costs would become a lot less acceptable.

This is where the Oregon concept differs from the Dutch version and what divides politicians in the Netherlands.

The Dutch Minister of Traffic promised that all revenues from the pay-per-kilometre scheme would go into road maintenance and road building and that implementation of the road pricing scheme would be fully compensated by abolishment of both motor vehicle tax and vehicle purchase tax (bpm). This was reason for car owner organisations and the main liberal party not to oppose the plans.

But the current bpm pays for more than road maintenance and building alone: part of it flows into the treasury. The Deputy Minister of Finance, member of the same christian party as the Minister of Traffic, is adamant part of the bpm be kept, be it under the header of ‘CO2 levy’ which would rise with the amount of pollution a car causes.

A further reason to hold on to part of the vehicle taxation is the fact that if the new road pricing scheme becomes too successful, which means people will drive a lot less, fuel tax revenues will deminish as well. This would be another serious loss for the treasury.

The Dutch taxation troubles lead to the conclusion that most ingenious feature of the Oregon concept, the fact that through the true-up system it allows a transition to road use fees on the back of the established system of collecting motor fuel taxes at the pump, is not suitable for the Netherlands.

Experiences elsewhere
There are other countries where road pricing schemes are in use, be it on a smaller scale. Germany has a road use based toll collecting system for trucks. Although the on-board units used in Oregon were developed after Siemens’ units used for truck tolling in Germany, German truck drivers cannot automatically pay at the fuel pump. A separate road use charge collection system is needed in Germany.

The on-board units all rely on GPS, which presents a problem within cities or near high buildings and overstructures but is alright on the German motor ways. But compared to New York City’s system using inflexible gantry-borne electronic toll gear, a system using on-board units is preferable.

Implementation of the envisaged congestion charging scheme in New York, charging movement within the charging zone, proved not only inflexible but far too expensive as well. Three quarters of the capital cost were made collecting a charge that would generate less than a quarter of the revenue.