Rhein on Energy and Climate

For years Bavarian politicians have been pushing for highway user fees for non-German cars. Now they may have come closer their goal. On 7 July, the German transport minister (CSU) has presented his plans, which should be turned into legislation before the beginning of 2016.

They foresee the introduction of mandatory vignettes for passenger cars (€10 for 10 days, €20 for two months, €100 for one year) for using the complete German 600,000 km road network.

Though non-German cars are the target of the operation German cars will also be formally subject to the fee. But de facto they will not pay for the vignette as its price of some €100 will be deducted from the annual vehicle tax, which might be a violation of the EU non-discrimination principle.

Independent from the EU implications, highway user fees are not an optimal method of financing the construction and maintenance of highways.

Unless it is done electronically, which will be possible only on the main highway axes, the collection is expensive, especially when applied and differentiated to millions of cars. In Germany the government expects to raise some €600 million of fees the collection of which may cost up to €200 million, a huge amount.

The most cost-effective way of charging highway users the cost of road construction/maintenance is through fuel taxes. They charge vehicles according to the wear and tear including air/noise pollution they cause.

It is by far the cheapest and most productive method of financing the road infrastructure. Germany raises fifty times more (€40 billion per year) through through fuel taxes than through the planned highway user fees. It would only have to increase the average tax rate per litre fuel by 5% to obtain the extra fiscal revenues the government hopes to achieve by putting in place a new bureaucratic machinery.

A substantial share of non-Germany road users would also pay fuel taxes during their stop-overs in Germany and thus contribute to what the German transport minister has unfortunately called the “equity gap”.

In conclusion, Germany will not become more popular with its neighbours by this absurd proposal, which will at best create a few thousand unproductive administrative jobs.

If it were to pass the many obstacles of the German political and legislative machinery the EU competition guardians should prevent it from ever becoming a European reality.

Eberhard Rhein, Brussels, 8/7/2014

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