VZCZCXYZ0000
RR RUEHWEB

DE RUEHTC #0310/01 1401309
ZNR UUUUU ZZH
R 201309Z MAY 09
FM AMEMBASSY THE HAGUE
TO RUEHC/SECSTATE WASHDC 2850
INFO RUEHBS/USEU BRUSSELS 0671
RULSDMK/DEPT OF TRANSPORTATION WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
RUEAEPA/HQ EPA WASHDC

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