Petrol prices in Iceland decreased significantly on New Year’s Day, when the fuel taxes were replaced by a per-kilometre charge. Both petrol and diesel prices in the capital area decreased by approximately one-third, with Orkan’s prices dropping from 279.6 ISK to 183.2 ISK per litre.
Drivers are assumed to pay for the use of roads, as opposed to fuel consumption. Under the old tax, older vehicles paid more and heavier cars did not pay in accordance to the stress they placed on infrastructure, the government states.
According to RÚV, drivers of bigger cars are better off than those on smaller vehicles under the new system. Jeep drivers will save tens of thousands of ISK, while those with smaller cars will have to fork over similar amounts.
Cars under 3.5 tonnes in gross weight are subject to a 6.95 ISK charge per kilometre, meaning that owners of a Toyota Prius and a Land Cruiser will be taxed the same.
In conversation with RÚV, Icelandic Confederation of Labour economist Ágúst Arnþórsson claimed that the new tax did not correspond to the governments emphases on more fuel efficient cars and less emissions.