Transport

Can a European solution solve the controversy about the German road toll ?

The controversy over a road toll in the EU’s largest member state has led to a rare infringement procedure between two member states. Beyond the technicalities and domestic politics, it raises a broader question about how to finance road infrastructures in Europe.

Infringement procedure

In 2017, in a move welcomed by mayors of bordering towns, Austria and the Netherlands filed a lawsuit against the toll before the European Court of Justice because Germany’s politically motivated exemption of nationals from the fee violated European anti-discrimination principles. As a result, the opposition in Germany asked the government to suspend the controversial tax until the end of the proceedings, including to prevent EUR 80 million in fines to burden public finances. Although the ECJ judgment would not have a direct suspensive effect on the introduction of the toll (unless specifically requested and granted by the Court), it could be a significant setback for Berlin politically.

Meanwhile, the deployment of the road toll in October 2020 remains likely despite the ongoing court proceedings. In February 2019, in a surprising Opinion, Advocate General Wahl argued that the fact that owners of vehicles registered in Germany benefit from tax relief on their annual German motor vehicle tax for an amount corresponding to the annual road toll does not constitute discrimination on nationality grounds. It thus advised the Court to dismiss the legal actions against Germany. Furthermore, Wahl suggested that the German infrastructure charge is in line with the “user pays” and “polluter pays” principles. Disagreements have been voiced by Brussels, which condemned the Opinion and expressed hope that the Court would not follow it in its judgment.

The German motorway toll led to one of the rare cases of infringement procedures between EU Member States.

The road ahead: Towards a European toll solution?

To date, the compatibility of the German road toll with the European Commission’s initiative on transforming the Eurovignette scheme remains open. In May 2017, with its First Mobility Package, the Commission proposed substantial amendments to the ‘Eurovignette Directive’ (Directive 1999/62/EC on the charging of heavy goods vehicles (HDVs) for the use of certain infrastructures). For the financing of motorways, they sought to move from vignette system (i.e. a time-bound flat fee) to a toll system based on distance covered. Existing time-based charges were to be phased out by the end of 2023 for heavy-duty vehicles and by the end of 2027 for light-duty vehicles. As a result, Germany may be forced to change its time-based road toll system, shortly after its introduction.

With its proposal, the Commission hopes to kill two birds with one stone: to achieve environmental objectives by incentivising less CO2 intensive transport and to address the funding gap for road infrastructure across the continent. As the documents accompanying the legislative proposal reveal, the Commission found that time-based charges are not effective in covering infrastructure costs, incentivising cleaner, more efficient operations, or reducing congestion. Moreover, the application of tolling to heavy-goods vehicles (HDVs) only, thereby disregarding other vehicles, was considered as an element distorting the competition between economic operators. That’s why the Commission intends to extend the “user pays” and “polluter pays” principles to light-duty vehicles (LDVs), including passenger cars.

The divisions within the Council are threatening to delay the ambitious transformation of the Eurovignette scheme

European decision deadlock: Possible getaway for Germany?

Meanwhile, the adoption of the Eurovignette amendments seems to be facing a bumpy road. In October 2018, the European Parliament further strengthened the initial proposal by requesting that vignettes for HDVs and vans intended for the carriage of goods be phased out at the start of 2023, while vignettes for passenger cars had to elapse at the end of 2025. Meanwhile, as of 2020, tolls and user charges applied to HDVs would be extended to all vans intended for the carriage of goods.
However, the current divisions within the Council of Ministers are threatening to delay the ambitious plans of the Commission. Although the Member States agree on the ‘’polluter pays” and “user pays” principles, they struggle to reach consensus. In Belgium alone, the Wallonian Parliament reopened the debate on introducing a vignette system in Wallonia, as opposed to Flanders that strongly favours a distance-based tolling. Member States are thus asking for more flexibility and letting them decide whether a toll or a vignette system is preferable.

Today, it is becoming obvious that the adoption of the reform will be postponed after the European elections of May 2019. The PKW-Maut saga is thus likely to continue, not without its own streaks of irony: not so long ago, Germany awarded the contract to develop the system needed to collect the toll to Kapsch ITS Solutions, a company based in Austria, whose government may yet halt the toll’s introduction before the European Court of Justice.

 

This is an updated version of an article originally published in the Europeanpublicaffairs.eu blog.

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