Per-kilometer tax to replace fuel tax for all vehicles next year

Starting next year, all vehicles will be subject to a per-kilometer tax, replacing the current fuel tax. The new tax was first introduced for electric and hybrid cars last year, with electric car owners paying six krona per kilometer driven, and hybrid car owners paying two krona. The exact amount of the new tax has not been specified, but it is expected to be levied on all traffic. In return, the fuel tax will be abolished, which is currently about 75 krona per liter of gasoline, while the carbon tax will increase.

The revenue from fuel taxes has been decreasing due to the electrification of cars and because gasoline cars have become more efficient, according to Davíð Þorláksson, the executive director of Betri Samgöngur, an organization that manages transport projects in the capital area. Revenue from vehicles has not kept up with expenditures, hence the need for a change in taxation, so that driving rather than fuel consumption is taxed.

Other new charges are also planned for traffic. For several years, there have been plans to introduce congestion charges in the capital area, also known as speed and traffic charges. These charges are intended to finance projects in the capital area. Although originally scheduled to be implemented in 2022, this has been delayed. However, Þorláksson insists that the implementation of the charges is still on the table. “It is clear that this is a very desirable option for the capital area, both to finance improvements in transport and to control traffic,” says Þorláksson.