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Tolling Points

Iceland Deliberates Tolling Options to Boost Highway Funding

By: 
Bill Cramer

Iceland has begun the process of introducing tolls for much of its national roadway network, in the face of rapid gas tax erosion and tough questions about how a tiny population will pay for the mobility it needs.

The story, laid out in a collection of news reports over the last several months, reads like a microcosm of the financial and environmental challenges and technology opportunities facing much bigger jurisdictions around the globe.

“It’s just my personal opinion,” said Bergþóra Þorkelsdóttir, Director of the Icelandic Road and Coastal Administration, in a radio interview earlier this year. “I have a hard time seeing how a 350,000-person population in a country this big would ever be able to build up the system without taking in any kind of funds, like road tolls or something of that nature, such that our guests are participating in the financing of it in some way.”

A Familiar Story

The reference to “guests” won’t come as a surprise to anyone who read Florida Transportation Secretary Kevin Thibault’s interview with Tolling Points earlier this week. The state operates at an entirely different scale than the tiny Nordic nation, but the need to factor in a big, continuing influx of tourists is similar.

“We want to be a global leader in rolling out transportation infrastructure that accommodates people, whether they’re the people who live here or tourists,” Thibault said.

In Iceland, similarly, “the additional stress that’s on the system comes from people who come here and want to use it,” said Bergþóra. “And I really think that these tourists who want to come here are prepared to pay some kind of fee for using the country’s infrastructure.”

That thinking helped drive a comprehensive all-electronic tolling bill, introduced in the Icelandic parliament last December by the Parliamentary Environmental and Communications Committee and Transportation Minister Sigurður Ingi Jóhannsson. “The planned tolls are meant to offset a loss of income from gas and diesel taxes, which are expected to fall rapidly over the next few years due to the government’s environmental action plan,” Iceland Review reports.

We’re used to seeing travel photos and tourist promos telling us that Iceland has it all, from gorgeous natural vistas to a pioneering geothermal energy system that delivers about one-quarter of its electricity.

The country recently phased out a combined electronic and cash tolling system on one tunnel, while introducing an all-electronic system on a new tunnel, with higher rates for trucks and discounts for frequent users, while legislators consider a bigger-picture solution.

The country as a whole is grappling seriously with declining highway revenue from traditional sources. “That income will not suffice for the road work we generally consider sufficient,” Jóhannsson said in December.

Earlier this year, a poll found public opinion evenly divided on tolling, with 40% supporting tolls to help advance needed road work, 40% opposing it, and 20% undecided.

And over time, by asking the same questions and going through the same deliberations we’ve been seeing in vastly larger jurisdictions, Iceland seems to be finding its way to many of the same conclusions and solutions -- tolling is one important tool in the funding toolbox.

Find the highway financing solutions that make sense for your jurisdiction! Attend IBTTA’s Summit on Finance and Policy, May 19-21, 2019 in Philadelphia.

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