Substantial increase provincial road tax

22/11/2004 10:00

In the period 1999-2003 revenue of provincial surcharge on road tax rose by 30 percent.

Tax revenue on motor vehicles imposed by the government rose by only 2 percent in the same period. Higher tax rates imposed by provincial authorities account for the sharp increase of provincial surcharge.

Road tax revenue

Road tax revenue

More and heavier cars

Central government collected 2.1 billion euro in motor vehicle tax, provincial surcharge on road tax amounted to almost 0.9 billion euro. Higher tax rates as well as a rise of the tax base account for increased road tax revenues. The number of cars and the average weight continue to grow and therefore higher tax proceeds are realised.

The rise by 2 percent of the government share is much smaller than the increase of the total number of cars in the Netherlands. This is due to a decrease in the government tax rate. The government seeks to lower recurrent costs for car drivers; direct costs for motorists were raised due to higher excise rates on petrol, diesel and LPG.

Surcharge main source of income

Surcharge on road tax is the main source of income for provinces, accounting for approximately 20 percent of total provincial revenues. These revenues need not be spent on road traffic improvements.

The only other essential sources of income for provinces are general payments from the Provincial Budget Fund and specific payments made by the ministries.

Percentage of households owning a car or motorcycle, 2003

Percentage of households owning a car or motorcycle, 2003

One quarter of households do not own a car or motorcycle

Although surcharge on motor vehicle tax is a general tax, 23 percent of all households – those who do not own a car or motorcycle – are exempt. Households owning more than one car are taxed for a relatively high amount by provincial authorities.

Provincial expenditure by sector, 2002

Provincial expenditure by sector, 2002

Provincial expenditure

Provinces cover a wide range of activities. More than 30 percent of total provincial expenditure deals with traffic and transport, for instance, road construction and maintenance. Welfare is also an important policy area.

Mattheus Wassenaar