Germany’s motorway toll: Can bad economics serve good politics?

The German government is taking final steps to roll out next year its controversial PKW-Maut, a motorway toll that would apply de facto primarily to foreign passenger cars.

Since 2013, the CSU has invested a large amount of political capital into the PKW-Maut project

The Maut proposal can be traced back to 2013. A flagship project of the CSU, the CDU’s Bavaria-based sister party, it was eventually included in the December 2013 coalition treaty between Angela Merkel’s conservative “Union” and the SPD.

Technical wrangling over legal compatibility with EU anti-discrimination rules, doubts about the anticipated tax revenue, and fears of excessive red tape were among the various reasons why the proposal did not have many friends within the German cabinet when it was first announced. In the end, the coalition government agreed to explore the possibility of a toll on two conditions: (1) it would conform to European law, (2) it would not create any additional burden on German car owners.

Unveiled in 2014 by former Transport Minister Alexander Dobrindt, the PKW-Maut became law on 1 January 2016. Its main dispositions were the following:

  • The toll would apply to all vehicles under 3.5 tons (including motorcycles) using German roads.
  • The toll will be collected on German federal streets and highways. Domestic motorists Domestic motorists are relieved of the payments by lowering the motor vehicle tax, whereas foreign drivers would pay for the use of highways.
  • All car drivers would be able to purchase windshield stickers of an average cost of EUR 70 per year (with a cap at EUR 130/year) depending on cubic capacity, fuel-use and year of construction (payable s EUR 10/10 days, EUR 20/2 months or EUR 100/year).
  • Following consultations with the Commission, Germany conceded, as part of a late change to the bill, that the short-term fees for foreign passenger car drivers would be further differentiated. Depending on the vehicle’s fuel efficiency, the price for a ten-day vignette would be based on a six-level fee scale. Domestic drivers using more fuel-efficient cars would also benefit from a passenger car tax credit of EUR 100 million.

new revenue?

On substance, the bill for an infrastructure levy addresses a legitimate concern: a yawning gap in investment poses a long-term problem for the economy. Germany’s road infrastructure, often hailed as a critical enabler for the Single Market, is ailing under high maintenance costs. It urgently needs reparation. According to Die Zeit, the estimated investment gap was worth a total of EUR 24.4 billion in 2016. This amount came on top of the investments of EUR 10 billion per year. The uptick foreseen in Germany’s 2018 budget to a yearly EUR 15 billion until 2022, while considerable, is still falling short to bridge the investment gap.

The new toll represents only a dent in this new financing. According to estimates by the German Ministry of Transport, the toll would increase revenue by EUR 500 million per year. Additional administration costs and the lowering of the personal vehicle tax would offset most of the EUR 3.7 billion in gross income. However, even if the official (optimistic) estimates were to materialise, the modest increase in yearly infrastructure funding (EUR 500 million) may not amount to more than a drop in the bucket for Germany’s real transport needs.

Spitzenkandidat Manfred Weber may have a chance to turn a local Bavarian initiative into a coherent European approach to road tolls.

a Bavarian story

There is more to the toll’s rationale than a wonky debate over the right policy response to structural challenges (infrastructure funding, ecological considerations). The toll’s appearance on the German political agenda was motivated in no small part by local politics. After its former party chief Horst Seehofer had promised Bavarians a toll as early as 2013, the CSU invested a large amount of political capital into the project.

Today, in the latest ‘grand coalition’ government in charge since March 2018, the Ministry of Transport is still in the hands of the CSU. Transport minister Scheuer appears just as eager as his predecessor Dobrindt to ensure the German Maut will see the light of day.

Furthermore, the party’s weak showing in the October 2018 regional elections was seen by some as evidence that the CSU was growing out of touch with the concerns of ordinary Bavarians. The results further encouraged Scheuer to make good on the CSU’s word and to deliver on an election promise. Introducing the Maut has now become a test of the CSU’s credibility – a key reason why the proposal has survived almost universal criticism.

Interestingly, in Brussels, overseeing the roll-out of the German toll will likely fall under the aegis of the next President of the European Commission following the upcoming European Parliament elections in May 2019. A possible scenario could see a CSU politician, the Bavarian Manfred Weber, take the job. He may thus have a chance to turn a local Bavarian initiative into a coherent European approach to road tolls.


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

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