Supplementary memorandum by Freight on
Rail (RH 19B)
WEIGHT-DISTANCE TAXATION
BRIEFING FOR
THE ETRA TRANSPORT
SUB-COMMITTEE
What is weight-distance taxation?
Also known as capacity-distance tax or vehicle-kilometre
charging, this is a pay-as-you-go system of taxing vehicles according
to their weight and the distance they travel. The tax is calculated
so as to reflect the external costs which HGVs impose upon the
road network.
What are the advantages?
Weight-distance taxation is not perfect but
it is certainly a more accurate way of charging road users for
the costs they impose upon society, the economy, and the environment.
The rate of taxation can include externalities such as, for instance:
— road maintenance costs;
— new building requirements;
The system is eminently fair because it taxes
the heaviest road users—the most loaded vehicles travelling
the longest distances—the most. Fuel duty is also a pay-as-you-go
system but it only reflects one (albeit very important) externality—fuel
use and hence CO2 emissions. VED, by contrast, is a
one-off flat payment and therefore, in order to recoup the costs
of that payment, it "pays" to make the maximum use possible
of the vehicle.
How does the tax effect the rail industry?
A weight-distance tax would benefit the railways
because the longer the road journey in question and the heavier
and bigger the lorry, the more expensive it is, and hence the
most cost-effective, by contrast, the rail option becomes.
Ultimately, it would only be fair that weight-distance
taxation were introduced across all modes of transport, with the
costs per tonne-kilometre varied to reflect the external costs
which each mode imposes.
Is weight-distance taxation currently legal?
No. It obeys the spirit of the recent EU Directive
(1999/62/EC)[38]
but not, as yet, the letter. At present, according to this Directive,
charging is only permitted on motorways and major roads. However,
it is arguable that this half-way approach to charging is worse
than nothing at all. The social and environmental damage caused
by using the motorway network (for instance in terms of accidents
and congestion) is in fact less than for using other roads—it
is better to route a lorry down a motorway than through an environmentally
sensitive area or a small Cotswold village. Motorway tolling can
encourage hauliers to take alternative, often longer routes, in
order to avoid them, so actually generating higher tonne-mileages.
This said, there is much in the EU White Paper
Fair payment for Infrastructure Use (1998) which sends the right
signals. For instance, paragraph one states:
"The elimination of distortions of competition
between transport undertakings in the Member States calls for
both the harmonisation of levy systems and the establishment of
fair mechanisms for charging infrastructure costs to hauliers".
Paragraph 7 says: "The use of road friendly
and less polluting vehicles should be encouraged through differentiation
of taxes or charges, provided that such differentiation does not
interfere with the functioning of the market".
And Paragraph 15: "The rate of user charges
should be based on the duration of the use made of the infrastructure
in question and be differentiated in relation to the costs caused
by the road vehicles."
Where has weight-distance tax been implemented?
Oregon, New Mexico, New York, Kentucky and Idaho,
as well as New Zealand and Australia operate weight-distance related
charges. Switzerland will have a system in place as from next
year, which will take into account the following externalities:
road infrastructure costs, health costs, accidents, noise, damages
to buildings, with CO2 and other forms of air pollution
being notably absent.
Germany is planning to introduce weight-distance
charging for the motorway network, possibly before the end of
2002. Austria currently operates an eco-points system which is
(as far as I understand it) a rudimentary form of weight-distance
charging.
Sweden and Norway used to have kilometre charges
on diesel fuelled vehicles but they abandoned this system on entry
to Europe in order to harmonise their charge structures.
Five countries—Belgium, Denmark, Luxembourg,
Germany and the Netherlands—have introduced the Eurovignette—a
fee for using the motorway network. France, Italy, Portugal, Greece
and Spain have motorway tolls.
How would a weight-distance tax work?
The system would need to:
— quantify and reflect, in so far as
this is possible, the marginal social, environmental and economic
costs of road use;
— be reliable—ie not break down;
— be resistant to fraud and evasion;
— be cost-effective to operate;
— be interoperable across the EU;
— avoid disrupting freight flows.
Initially the tax could be revenue neutral,
which would mean that vehicles carrying lighter goods and travelling
short distances would pay less than under the current regime.
But as HGVs currently only pay60-70 per cent of their costs it
would need to rise in time so as to reflect more accurately the
externalities they impose. Adjustment would also need to be made—perhaps
through subsidy and/or regulatory measures—to prevent lorries
from taking the shortest route where this is through an environmentally
sensitive area. Subsidies would also protect hauliers operating
in rural areas which are not served by other modes of transport.
Weight-distance taxation could co-exist with,
or replace VED and fuel tax. As fuel tax is actually a better
instrument for measuring CO2 there may be an argument
for operating the two taxes in tandem.
THE TECHNICALITIES
An electronic charging system could be designed
either using dedicated short range communication (DSRC) microwave
systems (as in Switzerland) or else GPS. Vehicles would need to
be fitted with on-board units and tachographs. The latter will,
in any case, be mandatory for all new EU vehicles from July 2000.
It is of course possible that some people will be able to avoid
tax by fiddling with the electronics, but the system need be no
more prone to abuse than the current one.
April 2000
38 On charging of vehicles of over 12 tonnes. Back
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