Kristrún defends mileage charge as fair way to collect vehicle fees

Icelandic Prime Minister Kristrún Frostadóttir defended the vehicle mileage charge as a fair way to collect fees, arguing that the previous system placed a disproportionate burden on people with older petrol cars who drove longer distances, mbl.is reported.

She spoke during an unscripted question session in Alþingi, Iceland’s parliament, after Independence Party leader Guðrún Hafsteinsdóttir asked why the government was raising the charge to collect an additional 4 billion krónur from households and businesses, despite promising not to raise taxes on working people.

Frostadóttir said it was reasonable to distinguish between taxes and fees. When the mileage charge was introduced at the start of the year, she said, it was designed to be revenue-neutral for the state. Revenue from vehicle charges had fallen as people switched to electric cars, she added, while owners of older petrol and diesel vehicles had shouldered more of the cost of maintaining the road system.

She said the charge had been under consideration by the previous government for years. Under its fiscal plan for 2027, the previous government had planned to raise 7.5 billion krónur from the fees, she said, while the current government had reduced that figure to 4.5 billion.

Frostadóttir said the earlier system was unfair because its costs fell relatively more heavily on people with older cars who drove longer distances in petrol vehicles. She said the mileage charge was therefore a fairer way to collect the fees.