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Higher petrol excise taxes are more efficient than road toll systems

Wed, 2014-11-12 12:20

About two thirds of the EU member states are using toll systems for financing the construction and maintenance of highways. National governments monitor the rates being charged; and this functions quite satisfactorily.

There is no reason for the EU to intervene, except insisting on strict non-discrimination between road users from different member states. This seems never to have been an issue, until two weeks ago Germany also announced its intention to introduce highway tolls from which German citizens would, however, be exempted for the equivalent of the vehicle taxes. Such a construction would be a discrimination and therefore an infringement of basic EU rules.

Toll systems are an expensive way of charging users for road construction and maintenance. Gasoline and diesel excise taxation is a far more effective instrument for charging cars simultaneously for using the roads and polluting the environment.

The EU applies minimum tax rates for gasoline and diesel. But the present rate of € 359 per 100 litre gasoline and diesel are too low to encourage citizens to buy fuel-efficient vehicles and help neutralising the external costs. The EU should therefore double the minimum rate to € 700/100 litre. Adding the 20 per cent VAT, taxation would account for roughly two thirds of the gasoline/diesel price which is in line with excise taxes on tobacco or alcohol.

A doubling of the excise tax on diesel and gasoline would have four positive effects. It would:

  • raise member states` fiscal revenue to finance the construction and maintenance of roads;
  • charge road users according to the level of their C02 emissions;
  • make it easier to attain the 2050 EU objective of reducing C02 emissions from road traffic by 60 per cent;
  • make further road toll systems superfluous.

    Eberhard Rhein, Brussels, 12/11/2014

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