Tax and regulatory policies for European Transport – getting there, but in the slow lane

This paper reviews policy developments in the EU transport sector. The EU has successfully introduced the external cost concept into policy thinking. In the policy orientations, there has been too much emphasis on climate and energy objectives. Also modal share objectives are popular among policy makers but are not a good guideline for transport policies. The transition from high fuel taxes to distance charges has begun for trucks, but the charges need to be differentiated according to place and time. The same transition will also develop for cars, as soon as implementation costs have been reduced and public acceptance has improved. EU transport policy priorities can be to allow and promote the progressive substitution of high diesel and gasoline taxes by other car and truck user charges that depend on place and time, to scale back overambitious implementation of biofuel and electric car policies and re-orient resources to R&D for cleaner vehicles, to efficiently regulate distance charges for trucks and to assure an unbiased assessment of infrastructure investment needs. Member country priorities can be to move away from high vehicle ownership and fuel taxes to local congestion charges; the extra burden on motorists might be offset by scaling back vehicle excise taxes and to complement the introduction of road pricing with peak-load pricing for public transport.