As Gasoline Use Drops Iceland Must Find New Ways to Fund Infrastructure Skip to content
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Photo: Golli.

As Gasoline Use Drops Iceland Must Find New Ways to Fund Infrastructure

Icelandic authorities are looking into new ways to tax vehicle use, Finance Minister Bjarni Benediktsson stated at a tax conference this morning, RÚV reports. Road and transport infrastructure in Iceland is currently funded by tax revenue from gasoline, and that revenue has decreased significantly in recent years, due to electric car use and other factors. 

“It’s important that we create a bridge from the old system and into the new one to ensure the treasury has enough revenue in the long term in order to support the development and maintenance of transport infrastructure,” Bjarni stated, adding that creating a new revenue system for transport and infrastructure was one of the biggest tax-related projects of this government term. The government would look at other ways of taxing vehicles, including by the distance driven, according to Bjarni. Any new taxation system implemented would need to continue to encourage consumers to buy greener vehicles, however. “We’ll see how it goes, that’s one of the big projects and we have already started,” Bjarni stated.

The Finance Minister also reviewed the government response to the ongoing pandemic at today’s conference. The taxation system had been amended to support homes and businesses due to the pandemic and help them grow out of the ensuing difficulties. Bjarni added that the Central Bank’s rate hikes could be taken as a warning, and that public funds in support of businesses and individuals must be reduced when possible.

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