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The Commission  today published  a proposal to  amend the existing  so-called
Eurovignette  directive  - which  lays down  Community-wide  rules  for truck
taxes,  charges and tolls  - in order to better  relate truck charges to  the
costs  of  road  haulage.  The proposed  changes  would  give  road  hauliers
incentives  to use  cleaner trucks  and vehicles that  do less  damage to the
road  infrastructure and  have a  small marginal  impact  on transport  costs
(with  an effect  on final  good prices  of 0.008%).  These results  would be
achieved  by  modifying  the  structure of  road  taxation,  without  raising
average tax  levels. It is, however,  proposed to provide  Member States with
the  ability to  levy higher  toll charges  for trucks  on  heavily congested
routes or in environmentally  sensitive areas, provided that alternative ways
of  shifting  freight  are available.  The  Commission  estimates  that  this
proposal  will  lead  to  significant  reductions  in  emissions,   cut  down
congestion on sensitive routes  and generate  infrastructure cost savings  of
ECU 1,600 to 4,000 million.

The Proposal

The "Eurovignette"  directive  (93/89) adopted  in  1993 specifies  Community
rules  for  road  charging in  three  areas: vehicle  taxes,  tolls  and user
charges (the  Eurovignette). By proposing changes  to the structure of  these
charges the Commission now seeks  to relate road charges more closely to  the
actual  cost of road usage caused by different  trucks. Annex 1 specifies the
proposed changes.

User charges (Eurovignette)

Community legislation specifies the  conditions under which Member States may
operate a user charge system  (a charge to be paid by  heavy trucks for using
the road network for a  certain period of time - e.g. a day,  month, year) if
they wish  to do  so. Currently Germany,  the Netherlands, Denmark,  Belgium,
Luxembourg  and (from  1.1.97 Sweden)  operate a  joint system  known as  the
Eurovignette whereas Austria has its own system. 

The present  system is  basically flat rate. It  is now proposed  to build in
differentiation according to the degree of damage vehicles  cause to the road
infrastructure  (Class  1  being  the  least  damaging)  and  the  degree  of
pollution  they generate.   To this  end it is  proposed to  use the existing
three  standards for  heavy goods  vehicles: pre-1988  (referred  to as  non-
EURO),  EURO I,  which became mandatory  in October  1993 and  the "greenest"
standard  -  EURO  II,  which  becomes  mandatory   in  October  1996.  These
regulations specify the maximum level  of pollutants which may be emitted  by
engines complying with the  regulation.  A pre-EURO truck  is more than twice
as polluting as the "greenest" EURO II truck.

Annex 2 details the proposed maximum annual user charges

Annual vehicle taxes

Annual  taxes on trucks  are mandatory  and have to  be above  minimum levels
that  vary with  the degree  of road  damage caused.  Whilst maintaining  the
existing  minimum  rates,  it   is  now  proposed  that  differentiation   on
environmental grounds  is also introduced on the  basis of the non-EURO, EURO
I  and EURO  II  classification. Moreover,  the  Commission also  proposes  a
number  of provisions  to ensure  that the  tax  burden on  identical vehicle
types does  not differ  too strongly across  different member  States of  the
Union: differentiated  maximum rates  and a provision  allowing Member States
to have  lower  annual vehicle  taxes provided  they  operate a  user  charge
system (so as to ensure  that minimum levels of  total taxes and charges  are
stabilised)

Tolls

The current rules  stipulate that  Member States may  impose either tolls  or
user  chargers across  the road  network -  not both.  However, where  a user
charge  system is  employed it  is  permissable to  levy charges  for use  of
specific parts of the network, eg. for the use  of bridges, tunnels, mountain
passes and sensitive routes.  In all cases tolls must not  be discriminatory,
nor  hinder the  free movement of  traffic.   It is  now proposed  to further
clarify that tolls  may not exceed  the costs of constructing,  operating and
developing the infrastructure (eg. the  bridge) on which the toll  is levied.
Member States  should, however, be  free to  introduce a  surcharge of up  to
ECU 0.03 to recover environmental and other external costs.

Sensitive routes

The  Commission recognises  that  transport problems  (congestion, pollution)
can be dramatically more serious  in certain cases and proposes to cater  for
such  "sensitive  routes"  in  the  current  proposal.  A  Member  State  may
introduce an additional surcharge on sensitive routes of up to  a ECU 0.5 per
kilometre. On sensitive routes where no tolls are  charged, Member States may
impose a specific daily charged up to a maximum daily rate of ECU 15.

Member States wishing  to define a sensitive  route and to charge  for use of
it will need to provide  the Commission with certain data in  order to do so.
This will include: congestion levels, and/or deterioration  in air quality or
noise pollution. Member States  will also have to demonstrate that  there are
alternative  modes of transport  available to operators in  the area and that
there is "open access" to these modes for authorised transport operators.

Effects of the proposal

On the Haulage Industry

The increase in the  weighted annual user  charges will be some  23% in  1998
while the average  increase in  transport taxation will  be only  2%.  For  a
haulier in a Member  state which operates a User Charge system this is likely
to represent an average of less than 0.2% of operating costs.

Hauliers  from  other  Member  States  will   typically  buy  shorter  period
Eurovignettes.   The ratio  of these to  the annual charge is  now fixed at a
smaller percentage than  currently employed  so these  charges will  increase
even less  than the annual  charge. The  result will  be that these  hauliers
will experience an even smaller increase in their relevant operating costs.

The sensitive route charge is capped  at ECU 0.5 per km or  ECU 15  per  day.
The  impact of  these charges  will vary depending  on the  proportion of the
total  journey which  they represent.   Overall  the  percentage increase  in
total  cost will be  much smaller for long  distance journeys passing through
sensitive  routes than  shorter journeys.   A journey of  750 km which passed
through  a sensitive route and was subject to  the maximum daily charge might
be faced with a cost increase of no more than 1.5%

On the Price of goods

For most industrial branches  road transport costs are a  small percentage of
production costs.   The Commission  has performed  an analysis  of the  price
impact  of  its proposal  for 54  sectors of  the economy.   This  shows that
without redistribution of  the (limited) additional revenues, average overall
prices would  increase by some  0.008 per cent.   With redistribution  - e.g.
through lower taxes on labour - there is no overall impact.

On road infrastructure costs and emissions

By the  year 2005  annual savings on  HGV generated infrastructure  costs are
estimated  to be  ECU 1,600  million in Member  States with  User charges and
they  could be  as high  as ECU  4,000 million  if the  same effect  could be
produced  throughout the  Union.   Most  of this  saving is  achieved by  the
change in  fleet composition.   Emissions could be reduced by an additional 3
per cent  on top  of  the 15  per cent  reduction  resulting from  compulsory
emission standards.

On the Generation of revenue

The  estimated increase in Member States revenue in  1998 on the basis of the
proposed Directive compared  with the current legislation is  approximately 2
percent.

The case for differential pricing

The  use of  roads  implies  two  sorts  of   infrastructure  cost:  that  of
construction and that of damage  arising from road use. Trucks are large  and
relatively  slow-moving, they  require greater  road capacity  than cars  and
roads built to withstand heavier loads. There is  a relationship between axle
weight and road damage  and it is widely  recognised that there are  benefits
to be gained  in terms of infrastructure damage  from encouraging the greater
use of lorries with more axles and road-friendly suspension.

But  road  use also  implies  other  "hidden" costs  -  policing,  accidents,
congestion, noise and pollution.  These are paid for by  road users, the rest
of society through general  taxation and in terms  of a deterioration in  the
quality of life. 

An efficient  way of  dealing with these  costs which  vary across  different
vehicle types,  time (e.g. congestion) and  space is to better  align charges
with  the full costs of  transport at  the level of  the individual transport
user.  By linking  charges closely  to pollution  or  other unwanted  effects
transport users will be given  incentives to use cleaner and  fuller vehicles
and to  reconsider transport  patterns, both  in terms  of  timing and  modal
choice. Whilst  maintaining the freedom of  choice this approach gives  every
individual  the possibility  to  select the  most attractive  combination  of
responses to deal with transport problems and  is, therefore, more attractive
than relying uniquely  on regulation which forces everybody everywhere  to do
the same.  Most of these  pricing schemes will have  to be  introduced at the
local  or national  level,  but some  degree  of Community  harmonisation  is
required  to avoid  incompatible pricing  systems or  wide differences across
the Union  which could  undermine the efficient  functioning of the  internal
market.

Transport policy has hitherto taken a  regulatory approach to the problem (eg
on emission standards) but  this does not recognise that external  costs vary
between  vehicle types and according to time and place. The growth in haulage
traffic  has added  to  congestion  such that  in  some  places traffic  jams
jeopardise the  single-market objective  of the  free movement  of goods  and
people. The  problem  is particularly  acute  in the  Alpine  region and  the
Commission is  looking at an Alpine  initiative to propose specific  remedies
in that area.

Between 1984 and 1994, the  number of heavy goods vehicle trips through  this
region  increased twice  as fast  as the  average  transport increase  in the
Union.
The Commission hopes,  through this proposal, and future initiatives  born of
the Green Paper on Fair and Efficient Pricing, to use road  charging where it
exists as one instrument  in a series of policies  (eg. the revitalisation of
the rail  sector, improvements  in the  organisation of  the inland  waterway
sector,  the  development  of  short sea  shipping  and  the  improvement  in
infrastructure  quality  that  will  be  the   result  of  the  TransEuropean
Transport  Networks) that  will influence  transport users  to reconsider how
and when they make their journeys. 

Annex 1

           Directive 93/89     Commission proposal
 Vehicle   Set minimum          Sets minimum and
 Tax       levels for          maximum levels for
           different vehicle   different vehicle
           weights and         weights and
           configurations      configurations (road
           (road damage).      damage).  
                                Requires a compulsory
                               10% difference between
                               tax levels for
                               equivalent non-EURO,
                               EURO I and EURO II
                               trucks.  
                                Member States with User
                               Charge systems may
                               reduce vehicle taxes
                               below the minimum
                               levels. 

 Tolls     Requires toll        Requires toll rates to
           rates to be         cover the capital costs
           "related" to        of the specific
           infrastructure      infrastructure on which
           costs.              they are levied.  
                                Tolls may include a
                               charge for external
                               costs of up to 0.03 ecu
                               per km.

 User      Set a maximum        Specifies maximum user
 Charges   level for annual    charge levels for 3
           user charges and    vehicle damage
           required shorter    categories and 3
           period charges to   emission levels.  
           be made              Requires shorter period
           available.          charges to be made
                               available and specifies
                               the ratio of charges for
                               different time periods.
                                Require permits to be
                               available 24 hours a
                               day.

 Sensitiv  Did not exist.       May be defined where
 e Routes                      congestion or
                               environmental impact of
                               transport is greatly
                               above normal levels. 
                                Charges for the
                               external costs must be
                               justified but a maximum
                               level is set of 0.5 ecu
                               per km or 15 ecu per
                               day. 
                                Decision on definition
                               and level of charges
                               will be taken by the
                               Commission after
                               consulting a committee
                               of the Member States.

Annex 2

1.   Maximum amount of annual user charges referred to in Article 7.e.

                                                                 ECU

                   Damage Class     Damage Class II   Damage
                   III                                Class I
 NON-EURO                2000            1500             
                                                      1000

 EURO I                  1850            1350               
                                                      850

 EURO II                 1750             1250              
                                                      750

2.   Minimum amounts of annual user charges referred to in Article 7.e.

The  minimum amounts  of annual user  charges are set  at 50%  of the maximum
amounts as specified above.

Please note  that it is up to Member States  to decide whether they introduce
a user change system.

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