Slow development of Europe's road user charging

Delegates convened in Brussels for Europe’s 10th annual Road User Charging Conference in March, when both positive and negative developments came to light for advocates of more widespread introduction of RUC. Jon Masters reports.

Goings on across Europe in recent months have again demonstrated how very sensitive road user charging (RUC) is politically. At the 10th annual Road User Charging Conference in Brussels at the beginning of March, a Danish delegation was notable for its absence, but Belgian government officials were there in force. The Danish Ministry of Taxation’s Klaus Jensen had been due to speak on the progress of Denmark’s lorry road pricing programme, but the news from Copenhagen was that the Danes’ RUC plans had been dropped just days previously. Jensen was a no-show, but professionals close to the project were in Brussels.

It seems that for the second time, the party in opposition to the Danish government has used RUC proposals as a political weapon. The party in power – that which opposed the plans last time around – has abandoned the scheme in fear of what it could mean come election time.

More complex

In Belgium the picture is completely different, which could be surprising given that Belgium would seem to present a more complex political landscape. This is the country that came close to collapse six years ago due to its rival factions being unable to form a coalition government. It is the country of Flemish, French and German speaking communities with borders rarely matching those of the Flemish, Walloon and Brussels regions. But despite this and the complications of having eight different political parties in power, an ‘inter-regional political agreement’ on road user charging was reached in Belgium in January 2011.

According to Flemish government councillor for budgetary and fiscal affairs Bart Dewandeleer, the agreement has come about due to a common aim of finding more equitable and sustainable systems of road tax and transportation.

At times the regions have been at odds over their preferred means of going about this, but they have settled on introduction of a national system of lorry road user charging as a precursor to RUC for all vehicles. Importantly, the agreement was signed at the beginning of Belgium’s latest four-year political cycle; the policy has stood a good chance of surviving long enough for the lorry RUC to be passed into law later this year.

“For the system to be truly effective, ultimately it should apply to all vehicles, but every region is convinced that we have to start with a kilometre based system of charging trucks. If this is shown to work, it could be expanded to apply to the six million cars registered in Belgium,” Dewandeleer says. “Meanwhile we will carry out a full test project for a distance based charge for light goods vehicles.”

The changes also include introduction of an electronic ‘vignette’ for charging goods vehicles under 3.5 tonnes, plus reform of Belgium’s regime of a one-off vehicle purchase ‘registration’ tax and annual BIV ‘circulation’ tax. “Flanders has already made important changes to its BIV tax to make it based on CO2 and Euronorm emissions parameters, so going towards a policy of encouraging greener vehicles,” Dewandeleer adds.

Learning from example

Belgium’s system of vehicle tax reforms was initially planned to be introduced in 2013, but Dewandeleer says the project is now expected to be complete by the end of 2015. The lorry RUC is due to be operational and in force early in 2016.
“It’s a step by step approach. In Belgium we are modest about expectations, but determined,” Dewandeleer says; pointing out also, that Belgium is learning from its neighbours’ experiences. In the Netherlands a full system of RUC was proposed then cancelled at a late stage of technical and political development, probably because the Dutch government tried to go too far too quickly, with all vehicles included from the start.

Belgium also has neighbouring France to observe as example.

The French national Ecotax system of truck tolling has been delayed by up to six months due to interoperability issues, but is still due to be ready for a final political decision on activation later this year. According to Dewandeleer, designs for the French national truck toll give a strong indication of the likely form of the Belgian equivalent – a hybrid of GNSS and DSRC for vehicle location, with GPRS communication with a back office system via mobile phone networks.

Officials involved in Ecotax have been consulted. Their advice, Dewandeleer says, is keep it simple. “We also learnt from Germany that we have to pay a lot of attention to the robustness of the system. Failure to do this can result in serious operational problems soon after activation of the RUC, damaging reputation and trust between the transport authority and the public,” Dewandeleer says.

The Belgian government has now conducted two years of technical, legal and financial consultation via a single consulting consortium. The next hurdle will be to clear the necessary statutory process, to approve the legal basis of the road tax reforms. Legislation is expected from the federal government in July. This will allow creation of a single interregional governance agency and the start of tendering for a design, build, finance and operate contract for the lorry RUC, due to be awarded in May 2014.

Problem solving

Crucial to the proposal is the Belgian government’s promise to reinvest revenue from the RUC back into the country’s road network. While achieving fairer systems of road tax and charging is a main objective stated, governments throughout Europe face the dilemma of bridging some big gaps in funding for upgrading and maintaining vital infrastructure.

According to the European Commission’s DG Move directorate, public spending on transportation as a proportion of GDP has fallen from 1.5% to 0.8% in Western Europe. In Germany there is a €2.5 billion deficit in road maintenance funding and at least twelve European Union member states have reported serious problems with the condition of their roads and bridges.
Furthermore, congestion is estimated to be costing European countries about 1.5% of GDP and is expected to increase, particularly in Eastern Europe and around major cities, says DG Move policy officer Jan Szulczyk: “There is also a complete patchwork of tolling and road charging systems in Europe, partly because there are many different allowable options for member states to pick and choose from,” Szulczyk says.

“Taking the corridor from Brussels to Paris, for example, a truck using this route will pay for road use via a vignette regardless of distance travelled at first. Then after crossing into France, it will pay a relatively high toll to use French motorways, before reaching the outskirts of Paris where the infrastructure is more expensive to build and maintain but is completely toll-free. All of this is bad for Europe’s competitiveness at a time when revamping growth should be a priority.”

Furthering legislation

Szulczyk was at the RUC conference in Brussels explaining what the EC is looking to do about these problems. There is already a number of European directives in place designed to encourage road charging based on time, distance and environmental impact and recovery of revenues, but the problems persist and a lack of response in the form of national RUC schemes has led the EC to investigate the possibility of further legislation.

“We have been looking at what can be done at an EU level for the past year and a half. A public consultation on road charging was conducted in the second half of 2012 and we are now carrying out an impact assessment on a new legislative proposal,” Szulczyk says.

Introduction of new legislation and what it will look like will depend on the outcome of the EC’s assessment, but any proposal is likely to be aimed at favouring distance based RUC and making it more simple and straightforward to introduce. However, the difficulties that individual member states face are illustrated by the results of the EC’s consultation.

This found that 96% of respondents agree that appropriate funds must be found to maintain transport infrastructure in good condition. Furthermore, 70% supported a proposed shift of emphasis to the principle of the EC’s ‘user pays’ policy, whereby road users instead of taxpayers pay for road maintenance.

But the numbers soon change when the idea of charges are introduced to the questioning. 42% were against road users having to pay to drive during peak hours and the same proportion of people objected to road charging during peak hours on interurban networks even if it were shown to reduce congestion. There was strong support shown in response to the EC’s questioning on the rationale of vignettes, however, which suggests reform of these time based systems of charging could be coming, possibly phasing them out altogether.

Lobby groups respond

An organisation that the EC needs to convince and cater for is Europe’s freight transport operators’ lobby group the Association of Vehicle Logistics, ECG. Speaking in Brussels to elaborate on his organisaton’s response to the EC consultation, the ECG’s EU affairs manager Tom Antonissen, said European freight operators are very much in favour of the EC’s ideas for greater transparency and fairness across tolling charges, providing these are not levied to encourage modal shift.
“We fully support moves to a pay as you drive system of taxation. Moving from ownership based to user based charging makes a lot of sense, but we don’t want an increase in the tax burden on operators and we want to see a level playing field for all modes of transport,” Antonissen says.

“It is hard to see where additional funding for infrastructure can come from if taxation neutrality is to be maintained, but obvious from our point of view is that RUC revenues should be earmarked for transportation investment. For instance, if a charge is levied against road noise, then use funds raised to mitigate against that, by building noise barriers or laying low noise asphalt.

We do not want to see RUC revenue being sunk into bottomless pits of rail funding. Transparency and timely consultation is key to public acceptability.”

Europe’s environmental lobby was also represented at the Brussels RUC conference, by European Federation for Transport & Environment deputy director Nina Renshaw. She gave some interesting insights from within Brussels.

“We are one of the few stakeholder groups that does not like earmarking. We certainly think lowering labour taxes, using RUC revenues to get people back to work would be sensible for stimulating economies, but there is a huge array of demands on public sector funds and it is not for Brussels to say where member states’ road charging revenues should go,” Renshaw says.

Secure revenues

RUC has become a “trending topic” gaining momentum over the past few years, Renshaw says, not because of media or political love for it outside Brussels, but because it’s proving itself, showing a list of advantages in practice as well as theory,
she says. “It will become more and more apparent that these systems work and provide more secure revenue than reducing unstable fuel taxation.

“Ministers are looking for more secure revenues. With fuel tax, their hands are tied by what neighbouring countries are doing, whereas RUC sets off a more virtuous cycle, shifting traffic flows to encourage neighbours to do the same, as in Austria and the Czech Republic, providing a fair distribution of impacts and revenues over time.”

RUC is being taken up elsewhere in the world, but Europe remains in the driving seat. In some cases, projects have been turned around and implemented quickly, in Slovakia, Poland and Portugal for instance, Renshaw says.

“Finance and transport ministers with massive funding shortfalls are likely to be looking at these examples and thinking it’s about time that there is a paradigm shift, recognising that road use is not free and has big costs for the environment which have to be paid for,” Renshaw adds.

“We don’t kid ourselves that RUC alone brings modal shift; that is not one of its proven advantages, unless it is backed up by a whole raft of other policies designed to attract drivers to other modes. But for the road transport sector it brings dramatic improvements in efficiency through changes in travel behaviour and it is fundamentally fair as everyone in the same type of vehicle, travelling on the same day at the same time pays the same.”