Pollution
The first dimension of the environmental impact is air pollution, the transport sector accounts for about 23% of total carbon dioxide emissions, and within this, road traffic is one of the fastest growing sources. While, road transport accounts for the highest proportion of all CO2 emissions from transport (CfTI 2001), the European Council and the European Parliament have targets to reduce CO2 emissions from motor vehicles by 2010 (EDIE 2002). A relevant share of the damage caused by emissions of air pollutants does not occur near the emission source, but, after transport and chemical transformation of the pollutants, hundreds or even thousands of kilometres away, through acid rain. As a consequence, to know how to tax this environment impact is quiet difficult, because this pollution concerns not only "on the local", but also "the regional and European scale" (Ricci & Rainer 1999).
Noise
Noise impacts, in contrast, are restricted to the very local scale of several hundred meters from the emitting source. Noise has the most limited effect on environment, as it disappears soon after the emission source has disappeared. Nevertheless, noise is unwanted sound or sounds of duration, intensity, or other quality that causes physiological or psychological harm to humans. Because of the complexity of noise, the impacts are difficult to evaluate in monetary values: the perception of sound as noise differs from person to person, from moment to moment; it depends on the frequency involved, the sonar energy and its duration and regularity (Ricci & Rainer 1999). That is why this impact is diffcult to tax.
- Congestion
Approximately 7.500 km, i.e. 10% of the main road network, are concerned by serious and daily congestion problems in Europe (OJEC 1999). A report (The Observer 2001), says that Britain has the most congested thoroughfares in Europe, with a quarter of British main roads jammed up for at least an hour a day and more than a tenth of the highway network blocked daily for three hours. But, Britain is not alone, a fifth of Spanish roads are congested, 15 % in the Netherlands and 13 % in the Republic of Ireland. Less than a tenth of roads in France, Austria, Belgium, Germany and Portugal are also jammed. In Europe, Congestion costs are currently estimated about 0.5 % of Community GDP(+/- 80 € billion), and could reach 1 % of GDP in 2010 (OJEC 1999).
Congestion costs arise due to the fact that additional vehicles reduce the speed of the other vehicles and hence increase their journey time. This is a cost to the logistics industry, indeed, research undertaken by the Freight Transport Association shows that congestion creates serious problems with planning and scheduling freight deliveries that affect the ability of the operator to provide a consistent quality of service to customers and suppliers. Unreliability of journey times means that over 40% of operators suffer more than a 5% increase in their transport costs in britain (CfTI 2001). Congestion causes also pollution, indeed, stopping and starting in traffic queues is bad for air pollution too. Traffic causes about 60% of our nitrogen emissions, while transport’s share of CO2 emissions is over 25%.
Currently, congestion is continuing to grow strongly and even if congestion charging will have been introduced in 8 urban areas by 2010, to date, take-up of congestion charging schemes by local authorities remains very slow. It is for this reason that charges must be calculated in a much fairer way in the aim to reduce levels of congestion, without impose additional costs on motorists in general, and logistic industry in particular (CfTI 2001). According to the CfTI "whatever the levels of traffic [in EU], (...) congestion charging can bring real benefits in terms of better use of the system, less congestion and greater network reliability".
- Accident and others externalities
Accident externalities arise when extra vehicles on the road increase the probability that the other road users will be involved in an accident. Accident probability depends to a large extend on distance, driving time and particularly the other traffic (). The costs of accidents are not covered by insurance and consequently, are borne by social security or society. Cost of accidents run into tens of billions € and an incalculable human cost, 40 000 people killed each year and 1.7 million seriously injured in the European Union (OJEC 1999).
Other environmental externalities exist (e.g. vibrations, water and soil pollution by water runoff, severance effects, damages to natural ecosystems, visual impacts etc.). Some studies conclude anyway, that the corresponding external costs are lower than those generated by air pollution and noise (Ricci & Rainer 1999).
II - How to tax HGV
As seen in the previous part, road users should pay prices that reflect the costs they impose (Ricci & Rainer 1999). For efficient taxation, these costs would include the damages done during their journey, such as congestion, noise and pollution (CfTI 2001). Thus, charges may vary, as well, by distance, location, time of day, vehicle type. The methods used to estimate external costs due to HGV, must be able to address all these different scales in the tax level. At present, EU countries vary in the types and levels of taxes imposed on lorries. Ten countries in EU, have registration tax and all countries have annual road tax (EDIE 2002).The problem is about how to tax HGV, on the road use, through tolls, annual tax, or nothing, none EU countries is yet agree. Moreover, the question of transport taxation is intricately linked to the principles of transport pricing (TRCF 2000). In other words, domestic taxes on HGV must not be too high, to avoid that road companies lose their competitiveness within the other EU countries, the tax level must represent as realistic as possible the damage caused but in the same time stay under what logistic industry is able to pay to be still competitive. Spanish haulage company which pay actually less national tax than its counterpart in Britain, have a comparative advantage on British road which are free. The Eurovignette was established, to ensure a fairer competitiveness between the members. But, this system add unfortunately to national tax
Anyway, in Europe there are different ways to tax lorries either directly on the vehicle or in the road use through direct tolls or periodic payment but also by fuel duty and the Eurovignette.
- Directly on the vehicle
Vehicle taxes are periodic (normally annual) taxes levied on vehicles in their country of registration. The minimum rates of taxation for vehicles and vehicle combinations with a total weight of 12 tonnes and over are differentiated by the vehicle's total weigh, axle number and suspension system in most EU countries, (e.g Britain : Vehicle Excise Duty, France : Carte Grise)(TRCF 2000). Primarily introduced for fiscal reasons, annual taxes levied on the right to use the vehicle and taxes on first-time purchase of the vehicles depend on : the engine size or power, the vehicle weight, CO2 emissions, according to vehicle type and condition. Nowaydays, these taxes are more related to the vehicle effects on the environment.
- Charges more directly linked to the road use
To use some roads in EU, especially highway you need to pay a direct based distance charge which takes in account the costs of constructing, operating, maintaining and developing of the network. Lorries pay already tolls in Spain, Italy, France Portugal, Norway and Greece. Austria plans to introduce tolls early 2004. In Germany, the government is trying to impose tolls to lorries currently, but in the same time, it will give subsidies to domestic HGV (OJEC 1999). Competition problems between European haulage companies are again in the order of the day. Anyway, road tolls are payments of a specified amount for a vehicle travelling between two points in the infrastructures concerned. In Europe, various forms of road tolls are collected. Toll roads often charge a fixed fee per axle of the vehicle. This means that "trucks pay 2.5 times as much as cars, even farther away from charging by road wear" (GIIC 2003).
The statistics on annual road tolls paid by HGV are very deficient (NRTR 2000). Nevertheless, in Switzerland, the Heavy Vehicle Fee (HVF) was implemented to cover the high costs of HGV on the roads. It is a distance based fee put into force in 2001. The fee calculating take also in account the external costs of heavy traffic, which consist of air pollution, noise and accidents caused by HGVs. In this way a ratio was determinated (2001: 0.1 Euros /tkm), reflecting as much as possible all the damages due to HGVs with total admissible weight over 3.5 tonnes. Distance travelled in Switzerland is obtained by an On Board Unit (OBU) which registers kilometers travelled on every domestic HGV. Distance travelled by a non domestic HGV is obtained by the actual mileage when entering and leaving the country. The fee could be paid directly on the toll or through an account with the Swiss Customs Authority (ITS 2003).
- Other charges , Fuel based
User charges are payments of a specified amount conferring the right for a vehicle to use over a given period the infrastructures concerned (generally motorways). User charges for various vehicle categories are differentiated by the vehicle's axle number and emission class (e.g the Eurovignette).
Fuel duty is the most important charge for a HGV in Europe, (TRCF 2000) and dominates cost in the Nordic countries. Thus, the United Kingdom experiences the highest fuel duty in Europe, but in the other hand, british highways were until now free.Building of major highways in UK is mostly paid for by the gasoline tax, so drivers everywhere are helping to pay for the new roads, so everybody is paying those costs. Transport lorries use many more miles of road than cement lorries which less than 50 kilometre a week, do. They pay the same amount of direct charge than a lorry which travel much more, in this case fuel duty is the fairest charging system.
III - How HGV are currently taxed in Europe
- Eurovignette countries
The Eurovignette was established to limit competition problems within the road freight sector caused by the existence of very different methods and levels of charging for infrastructure use in different countries. Six countries (Germany, Belgium, the Netherlands, Luxembourg, Denmark and sweden) are currently participating in this common user charge system (NRTR 2000). In other word, lorries concerning by the Eurovignette pay for the use of the entire European network, the problem is that they must pay, as well, national tolls in the country travelled. A Sweden or Danish lorry pay the Eurovignette but as well, French tolls during its journey on French motorway, however, according to the EU, annual domestic vehicle taxes may be reduced below the currently permitted to compensate (ITS 2003). Eurovignette is only approximately 6% of the total tax burden in Sweden and Denmark. A drawback of the Eurovignette is that environmental cost is not taken in account but according to the EU (data 2002), the aim is respected, given that total tax burden is fairly similar in Eurovignette countries, this contributes to fair competition.
- Countries with tolls on specific roads
In Germany, charges are a combination of tolling and public-private-partnership models. Private operator running the system may ensure cost-effectiveness and consumer friendly behaviour. Charges are applied to all lorries weighing 12 or more tonnes using German motorways. They are based on number of kilometres travelled and are differentiated by number of axles, pollutant emission categories, and place and time. The benefits of the German distance based HGV user charge (GFTM 2002), is that there is a more precise application of "user pays principle" for domestic and foreign road users and a fairer competition between road companies even if German government grant its domestic lorries by annual discount on other taxes (ITS 2003).
- Countries with no direct road charging at all
In UK, while there are only few user charge, a charge is hoped to be introduced in 2006, its objectives are that all road users should pay at levels which reflect the costs they impose, namely, climate change, local air quality, road maintenance, safety, traffic congestion and noise. The British Government plans to reduce fuel duty when the charge will be introduced, to keep the same tax level burden. This charge will be applied on domestic and foreign lorries over 3.5 tonnes, and on all UK roads with the potential of a different rate for motorways. This charge mayl vary by lorry type (emission, weight), and according to time of day (ITS 2003).
- Conclusion -
To conclude, even if there are much car on the road than HGV, lorries damage the infrastructure, the enviroment much more and contribute to increase congestion. However, current taxes are not revelant for the true cost HGV impose. Indeed, the EU push its members to take in account real external costs in the tax calculating. While most members are agree to apply tax according to the type of vehicle, distance, time of day and location, they are disagree on the way HGV must pay, either by tolls or by direct taxes on the vehicle and on the fuel. Anyway, logistic industry should appreciate that according to the EU, a tax standardisation will permit national taxes to be reduced. Toll roads seems, in many ways, a good solution to the problem of charging for road use. Users pay right at the time of use, making the connection between travel and cost very clear. It is easy to charge different rates for different kinds of vehicles and time-of-day rates can be adopted to discourage peak-hour traffic. Until now, for all these reasons toll charges should reflect as fair as possible the damage caused by HGV, and even the UK will implement this system since 2006.
References :
1. Autoroutes du Sud de la France Road Show 20 janvier 2003
2. BBC News, 22 September, 2000, "Lorry taxes 'pay for roads damage'"
3. CfIT 2001, Commission for Integrated Transport, Report "Paying for road use", Chapters 2, 3, 4,
4. DfT 2003, Department for Transport, article "Lorry Road User Charge" (9 July 2003), www.
5. EDIE 2002 – the online community for water, waste & environment professionals- Faversham House Group Ltd 2002, article "Road tax should be based on car emissions, says EU"
6. FTA 2002, Freight Transport Association article on line "Lorry Road User Charging" February 2002,
7. GFTM 2002, German Federal Transport Ministry:
8. GIIC 2003, German Industrial Institute Cologne article on-line "The Toll System for Heavy Goods Vehicles – More than Infrastructure Costs" No. 28 of 10 July 2003
9. ITS 2003, Institute for Transport Studies, October 2003, Report "Charges for Heavy Goods Vehicles: EU Policy and Key National Developments" Chris Nash, Bryan Matthews, Batool Menaz and Esko Niskanen
10. Link & Maibach 1999, Heike Link and Markus Maibach, European Union Report "Calculating transport infrastructure costs", april 1999,
11. OJEC 1999, Official Journal of the European Communities 20. 7. 1999 "Charging of heavy goods vehicles for the use of certain infrastructures",
12 Ricci & Rainer 1999, European Union report "Calculating transport environment Costs", april 1999, Dr Andrea Ricci and Professor Rainer Friedrich
13. Road Haulage Association:
14. TRCF 2000, Technical Research Center of Finland, Report "Taxation of Road Freight Transport in Europe" 2000 :
15. the Adam Smith Institute and The Smith Group article " Pratical solutions for road pricing", 1998, http://www.adamsmith.org/cissues/tax-and-economy/lilico2.htm
16. The Observer 2001, Joanna Walters, November 25,
17. Toll Collect data :
18. UK Government, road tax rates by specific type of vehicle2003,
(*) Report conducted on behalf of the Department of the Environment, Transport and the Regions, to work out how much the government should be charging truckers.