Icelandic government launches consultations on proposed kilometer tax for all vehicles

The Icelandic government has opened a consultation period regarding a proposed “kilometer tax” aimed at all vehicles. This initiative stems from a previous kilometer tax implemented at the start of the year specifically for electric and hybrid vehicles. The new proposal seeks to establish a more comprehensive tolling system to replace the current fuel tax.

Consultations began on Tuesday and will remain open until Sunday, October 20. The government intends to implement this revised toll system by the beginning of the new year.

As of now, 15 responses have been submitted regarding the kilometer tax. Critics have expressed concerns that all vehicles under 3.5 tons will be subjected to the same fee, which raises equity issues. For instance, a small car weighing 1.1 tons would pay the same toll as a 3.3-ton SUV, despite the latter consuming significantly more fuel. For vehicles exceeding 3.5 tons, the fees will increase progressively based on weight.

This tax reform is described as a crucial step towards generating new revenue from vehicle usage and fuel consumption. The urgency for a revised system comes amid ongoing discussions about sustainable transportation financing and the need for equitable solutions to meet environmental goals.