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Congestion pricing in Netherlands

Environmental economists the world over are following with interest the trial of GPS-based congestion pricing in the Netherlands. Here charges are imposed on travel in a way that depends on the extent of congestion and route taken. Charges also depend on the fuel efficiency of the vehicle which captures in an approximate way the effects of pollution externalities as well. Charges appear on a in-vehicle metre that record real time costs although billing occurs monthly.

Those electing to participate in the congestion pricing experiment are exempt from all vehicle taxes and registration charges. Thus motorists pay for the costs they impose in terms of congestion and pollution, not for the cost of owning a vehicle.

Australia and other countries can learn from this bold experiment by the Dutch.

Hat Tip DavidP

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