Progress in charge structures and internalisation policies
Assessment made on 01 Jun 2006
ClassificationTransport (Primary theme)
- TERM 026
Policy issue: Recover the full costs of transport including externalities from users
There is some progress in restructuring transport charges towards better internalisation of external costs, even though it is slow. Important developments are the introduction of urban charging schemes and distance related charging schemes on motorways. Charge differentiation concentrates mainly on air pollution in the road freight sector, noise in the aviation sector and CO2 emissions of passenger cars. In general, few measures have yet been taken to internalise costs of CO2 emissions, rail and road noise and congestion
Given the importance of differentiation of transport charges and taxes on the basis of environmental impact, the indicator gives a qualitative overview of the adaptation of price structures in transport towards environmental characteristics. Although there are many examples of good internalisation initiatives, it must be noted that the incentives provided are generally below the level of the externality, see also TERM 25 and 22. The fact sheet on fuel prices and taxes (TERM 22 EU - Progress in charges) sketches the development of use-dependent transport charge levels.
Because the required level of transport taxes and charges under a fair and efficient pricing regime following the user and polluter pays principle depends on local and temporal circumstances; it is hard to reflect externalities always exactly in charge levels. In practice, it is more common that existing taxes and charges are differentiated based on environmental characteristics such as the level of air pollution in the road freight sector, tax reductions for fuel efficient and hybrid passenger cars, noise in the aviation sector and scarcity in rail infrastructure charges. Very few measures have yet been taken to internalise costs of congestion on the road, rail and road noise (some aviation and rail charges, and some urban parking fees are exceptions as regards congestion (1)) and climate change and air pollution cost in aviation. In urban areas, the internalisation of external costs is still far from complete.
Countries that most frequently apply environmentally differentiated taxing and charging schemes (leaving aside fuel taxation) are United Kingdom, Germany, France, Italy and Poland. For Iceland, Liechtenstein, Malta, Estonia and the Slovak Republic not any scheme has been identified by the available information.
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