Dutch first in Europe to adopt green tax for cars

The Dutch government is to become the first country in Europe to introduce a green tax to replace annual road tax on cars.

Drivers will have to pay per kilometer driven in a bid to end chronic traffic jams and cut carbon emissions. The system, which will use Global Positioning Systems (GPS) to monitor cars, could be used as a test case for other countries weighing options for easing crowded roads. Singapore has a similar scheme for charging according to the amount of travel.

When the plan takes effect in 2012, new car prices could fall by as much as 25 per cent with the abolition of purchase and road taxes. Instead, an average passenger car will pay €.03 per kilometer (£.04 per mile), with higher charges levied during rush-hour and for travelling on congested roads.

But the Dutch Transport Ministry said trucks, commercial vehicles and bigger cars emitting more carbon dioxide will be assessed at a higher rate. The GPS devices installed in cars will track the time, hour and place each car moves and send the data to a billing agency.