Opinion of the Economic and Social Committee on the "Commission White Paper 'Fair Payment for Infrastructure Use: A phased approach to a common transport infrastructure charging framework in the EU'"

(1999/C 116/07)

On 31 July 1998 the Council decided to consult the Economic and Social Committee, under Article 198 of the Treaty establishing the European Community, on the White Paper entitled "Fair Payment for Infrastructure Use: A phased approach to a common transport infrastructure charging framework in the EU".

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 9 February 1999. The rapporteur was Mr Kielman.

At its 361st plenary session (meeting of 24 February 1999) the Economic and Social Committee adopted the following opinion by 117 votes to 0, with 2 abstentions.

1. Introduction

1.1. The present White Paper is a follow-up to the 1993 White Paper on the future development of the common transport policy(1) and the 1995 Green Paper entitled "Towards fair and efficient pricing in transport"(2). In the White Paper the Commission suggests that a harmonized Community approach, based on the "user pays" principle, be adopted to transport charges and maintains that this will enhance both the efficiency and the sustainability of the transport system.

1.1.1. The great diversity of current infrastructure charging systems across modes of transport and Member States undermines this efficiency and sustainability.

1.1.2. The variety of problems thrown up by the diversity of approaches to infrastructure charging cannot be adequately treated in isolation from each other.

1.2. The Commission therefore thinks that a gradual and progressive harmonization of charging systems, based on the "user pays" principle, is necessary throughout the European Union for all important commercial transport activities.

1.3. The proposed charging system is based on infrastructure users paying for the costs they engender, including environmental and other external costs, right from the first moment that the infrastructure is used.

1.3.1. At the same time, the system involves allowing Member States to continue providing aid for public services or services of general interest.

1.3.2. Finally, the system is not intended to be a central charging system. Its aim is just to provide a "framework" within which Member States will be free to indicate/set charging levels.

1.4. As stated earlier, the Commission is proposing a step-by-step implementation procedure. In the first phase, up to and including the year 2000, the aim is to introduce a charging system for railways and airports. This will complement the charging system in road haulage, so that a broadly compatible structure is in place in the main modes of transport.

1.4.1. During this period an advisory committee of experts from the Member States will work with the Commission. All stakeholders will be involved in the activities of this committee.

1.4.2. In the second phase, up to and including the year 2004, charging systems will be brought into line with the system set out in the first phase, while new taxation systems are introduced, coupled with a possible review of existing charging systems. In the third and last phase, after 2004, the experience gained in the first and second phase will be incorporated into the system and further harmonization of the system undertaken, with marginal social costs being built in.

2. General comments

2.1. In its own-initiative opinion on infrastructure costs in the road-freight transport sector as a basis for comparison with other transport modes(3), the ESC concluded that "infrastructure and external costs should be fully allocated to the different modes in a fair, uniform manner".

2.2. The present White Paper suggests how this might be done, subject to the express provision that total costs should not rise.

2.3. The White Paper gives no pointers about how to finance transport infrastructure because the infrastructure financing schemes that are in force in the EU vary so widely and also because of the subsidiarity principle.

2.4. It should also be noted that while the White Paper sets out the relevant cost components in a table (section 2.1, page 2), it fails to indicate the relative importance of these cost components for the different modes. The ESC considers that clarity on this point is essential to any Community blueprint. It is particularly important for drawing up an implementation strategy because it could easily cause distortions of competition.

2.5. The relative importance of, for instance, fixed costs, internal variable costs and external costs, such as air and water pollution and noise, can vary from one mode to another and depend on local conditions. In view of this lack of information on the relative importance of the cost components, the ESC urges the Commission to undertake, in the near future, a large number of selected individual case studies. These studies should also consider the measuring problems for external effects on the environment, etc.

2.5.1. It should think about conducting 20 to 30 studies covering the different modes in the different Member States and aimed especially at providing additional information on the various cost components, preferably in absolute terms (though in relative terms if this is not possible). One important cost component that certainly must be investigated in these studies is the time factor, as should the consequences for the social dimension. These studies could be fleshed out with data on the charges and taxes currently levied on the different modes so as to determine the present percentage of cost recovery.

2.5.2. There are, for instance, five ways of combating environmental pollution in the transport sector:

a) by using technology to combat emissions and noise;

b) by means of local traffic control measures;

c) by using taxes and charges;

d) by improving education and information; and

e) through planning and the quality of urban and rural infrastructure.

2.6. The first two measures are widely applied. The White Paper focuses on the price mechanism. What is lacking, however, is an analysis of what has been achieved so far with the possibilities mentioned under a) and b) and an assessment of the extent to which additional taxes and charges could lead to even greater improvements. The ESC thinks that the Commission should also take account of the views contained in its opinion on the Commission's Green Paper on sea ports and maritime infrastructure(4). The comments made in this opinion are very relevant to the specific problems of a charging structure for ports. The Commission is after all concerned that infrastructure users should pay for the costs they engender. It reiterates this in the White Paper too, under section 5(b), point 8, when it states that "harmonized marginal cost based charges for HGVs and commercial passenger transport should replace existing charging schemes on the basis of a variety of instruments including tolls and user charges". The same principle must apply for other modes, but the Commission is not specific about this. The ESC feels that this is a critical issue because, in its view, income neutrality cannot be guaranteed.

2.7. The Commission states in the White Paper that European transport infrastructure is of great importance for economic growth, labour mobility, infrastructure users and the competitiveness of the European Union.

2.8. The aim is to create the conditions for an optimal contribution by traffic and transport to the EU's general prosperity. Traffic and transport are essential to production and consumption, and as such contribute to prosperity. An optimal contribution can be achieved by using the market to confront individual decision-makers with the actual costs resulting from their decisions. The White Paper proposes that above all the instrument of charges should be used to apportion social costs.

2.9. The social costs of traffic and transport are taken to mean such things as:

a) operational costs (labour, energy, vehicle maintenance);

b) infrastructure costs (traffic management, maintenance and wear and tear);

c) damage to nature and the countryside and nuisance from noise;

d) direct and indirect costs of traffic accidents.

2.10. The costs under a) are internal costs of third parties or firms, those under b) are external costs to the extent that they are covered from general resources. The costs mentioned under c) should be established by the government of each Member State so that they too can be included as external costs. Traffic accidents etc. as referred to under d) cause direct and indirect costs. Where they cannot be attributed to a responsible party, they should be regarded as external costs.

2.11. The above overview of the social costs of traffic and transport does not include the costs of congestion, since these are already partially internalized. In fact, even the party responsible suffers disadvantages in the form of loss of time.

2.12. The "price" to be paid for the above-mentioned costs is intended to ensure that transport bears the costs for which it is directly responsible. If the revenue from this price (charges) is higher than average costs, the use of the infrastructure will provide the infrastructure manager with virtually maximum revenue, thereby sending a clear signal that the infrastructure is becoming inadequate. The infrastructure manager will have to take the decision about expanding and/or renewing infrastructure.

2.13. In Europe traffic and transport policy is decided at different levels. Naturally, the development of European policy is at the centre of the present White Paper. In the name of subsidiarity, many aspects of policy are left up to the Member States themselves. But there are also many things for which a Community approach offers advantages, such as:

- maintaining the unity and transparency of the internal market;

- harmonizing indirect taxes, such as fuel taxes;

- cross-border environmental problems;

- the effective operation of cross-border traffic and transport systems and networks; and

- sustainable regional development.

2.14. It therefore seems desirable to take a closer look at Community policy and the division of authority between the EU and the Member States regarding the charges to be applied, especially where the system of a uniform structure may intersect with nationally-set charges. As long as both the principles and the level of taxes and charges vary not just between the different modes of transport but also between Member States, competition will be affected.

2.15. European state aid should be reviewed if the costs of infrastructure are to be apportioned correctly to users.

3. Comments on specific modes of transport

3.1. Road transport

3.1.1. In the first phase the Commission wants to design a charging system for lorries and commercial passenger transport. Proposals for implementation have already appeared and have been commented on(5).

3.1.2. For various reasons it seems right to link introduction to the use of advanced electronic systems. However, for the moment there are still some problems here. It seems sensible initially to use current equipment that has proved its worth.

3.1.3. The Commission says in the preamble to the White Paper that it wants to achieve further harmonization of charging principles in all commercial transport modes. Charges on private cars are left to the Member States. Although private car traffic in itself causes no distortion of competition on the internal market, it may be argued that this type of transport does compete with public transport and other forms of commercial passenger transport. It certainly is important in the "modal split" in passenger transport. In addition, passenger transport accounts for a large proportion of road infrastructure use and the associated external costs. If a substantial part of the external costs are not apportioned, the question is whether the aim of, for instance, reducing environmental damage can in fact be achieved. Although the Commission says that the infrastructure costs to be imposed will not automatically be reflected in transport prices, because firms will change the way they use infrastructure, this clearly seems to be inevitable in phases one and two.

3.2. Railways

3.2.1. The EU is currently preparing a draft directive on rail infrastructure charges(6). Hopefully, this proposal will be adopted by the Council in phase one. In the second phase the EU wants to take external costs into account. But because implementation of Directive EC/91/440 on the development of the Community's railways is proving difficult, it is questionable how far the EU's plan will be successful. The improvement in the rail-transport market referred to in that directive is, together with corresponding investment in European rail infrastructure, an important precondition for the future improved competitiveness of railways in the European goods transport sector.

3.3. Inland waterways

3.3.1. According to the European Commission the present infrastructure charging system in inland waterways does not lead to serious distortions of competition because, in its view, costs are relatively small and the charge relatively low. Consequently, further reforms have no priority. This works out well because under the Mannheim Convention no charges may be levied on the Rhine. If any infrastructure charges are introduced, this Convention will have to be amended. To complicate the issue, Switzerland - which is a contracting party to the Convention - is not a member of the EU. The Commission must come up with proposals on this in the third phase.

3.4. Aviation

3.4.1. As we know, the Commission has brought out a proposal for a directive on airport charges(7). This goes into the principles on which charges are based: a fair reflection of costs, transparency and non-discrimination. For the moment, aviation is still different in some respects from other transport modes. For instance, aviation fuel is exempted from excise duty. Tickets for international air travel (including journeys between EU Member States) are VAT-free. The possibility of abolishing the tax-free status of aviation fuel and VAT zero rating of airline tickets should be investigated.

3.4.2. The possibility of taxing exhaust gases could be investigated as an alternative to imposing excise duties on aviation fuel. Such a charge could be collected in the same way as the costs of air navigation services and could lead to an improvement in engine technology.

3.4.3. In the above-mentioned approach, serious consideration must be given to the current international conventions, e.g. those concluded under the ICAO.

3.5. Maritime transport

3.5.1. Maritime transport infrastructure consists in particular of sea ports.

3.5.2. In the Green Paper on Ports and Maritime Infrastructure(8), the framework for port charges is described with the aim of making equivalent competition possible between EU ports. A framework for levelling port charges can only be developed when it is known where and what public funding of ports is involved and what state aid is given. In addition, the accounting practices of ports will have to become more transparent.

3.5.3. It is interesting that the EU now feels that the costs of investments in port infrastructure must be borne by the direct users. As well as port infrastructure there is other infrastructure in maritime transport, such as world-wide navigation systems.

Further Commission objectives in the second phase are to introduce environmental taxes on fuel and lay down minimum fuel quality standards. It must be borne in mind here that the minimum quality of maritime fuels is currently governed by international ISO standards and that the international maximum levels for sulphur content in maritime fuels have been stipulated by the IMO in Appendix VI to the MARPOL convention. Attempts to charge regional eco taxes on maritime fuels must bear in mind that such taxes constitute excise duties and could therefore only be levied on fuel consumed in the territorial waters of the Member States. However, the vast majority of international maritime transport - even that between EU Member States - takes place in international or foreign waters.

3.5.4. Both must be considered in the light of international conventions(9).

3.5.5. The ESC notes that the recent draft Directive concerning port reception facilities for ship generated waste provides for their compulsory discharge and the payment of fees. In order to achieve better co-ordination, it is suggested that the final system for charging fees for the use of port reception facilities should be based on the general principles of the White Paper on transport infrastructure charging.

4. Specific comments

4.1. It is important that representatives of the relevant co-ordinating organizations take part in the consultations of the committee that helps the Commission in the activities involved in the various phases of development.

4.2. Although the Commission wants to implement the charging system for the different transport modes in three phases, it is desirable, from the point of view of equal treatment of transport modes, to implement the charging principles at exactly the same time; implementation should as far as possible be at source. As regards aviation and maritime transport, account must be taken of the global nature of these modes.

4.3. One point worth bearing in mind is that calculating costs in an imperfect market, can never give completely accurate results. For instance, in the case of the railways the complete implementation of Directive 91/440/EEC must be given the highest priority.

4.4. As regards imputing infrastructure costs correctly to users, a thorough review of European policy on state aid in the transport sector, bearing in mind the objectives of other European policies and an efficient future society, is desirable.

4.5. It must be ensured that imputing costs to the user does not infringe one of the basic principles of the EU, namely free circulation of persons and goods.

5. Conclusion

5.1. The Commission's White Paper deserves support because of its basic principle that "users pay for all the costs they engender".

5.2. In the ESC's view, this principle can only be implemented if there is a thorough analysis of the relative value of the different cost components and a level playing field for all transport modes.

5.3. The ESC feels that before introducing the "user pays" principle, things must be clear about income neutrality and the way this is put into practice.

5.4. Once again, the ESC would specifically point out the world-wide nature of aviation and maritime transport, where decisions should be taken in accordance with international conventions.

Brussels, 24 February 1999.

The President

of the Economic and Social Committee

Beatrice RANGONI MACHIAVELLI

(1) OJ C 352, 30.12.1993, p. 11.

(2) OJ C 56, 24.2.1997, p. 31.

(3) OJ C 18, 22.1.1996, p. 27.

(4) OJ C 407/17, 28.12.1998.

(5) COM(96) 331 final - ESC opinion in OJ C 206, 7.7.1997, p. 17; COM(1998) 427 final, 13.7.1998.

(6) COM(1998) 480 final, 22.7.1998.

(7) OJ C 73, 9.3.1998, p. 38.

(8) OJ C 407/17, 28.12.1998.

(9) See, among other things, the MARPOL convention.

APPENDIX

to the opinion of the Economic and Social Committee

The following rejected amendments obtained more than a quarter of the votes cast:

Point 3.1.3

Insert the following sentence after the sentence

"In addition, passenger transport accounts for ... external costs":"In view of the Commission's objective of changing the modal split to benefit more environmentally-friendly modes of transport, the removal of private vehicles from the planned imputation of infrastructure costs is inexplicable."

Reason

This change underlines and strengthens the rapporteur's statement and defines the central problem somewhat more clearly.

Result of the vote

For: 27; against: 68; abstentions: 10.

Point 3.1.3

Delete the text of point 3.1.3 from the beginning of the third sentence onwards and replace with the following:

"European Commission studies prove that the contribution of the road haulage industry to the financing of external transport costs is far less than the actual costs incurred. Lorry traffic accounts for a large proportion of road transport infrastructure use and the associated external costs. These costs should therefore be apportioned in line with the principle of fair pricing and in order to achieve the proposed reduction of damage to the environment."

Reason

Point 3.1 discusses measures for commercial goods and passenger vehicles, including a charging system for lorries and commercial passenger transport (point 3.1.1) and advanced electronic toll systems (point 3.1.2).

Point 3.1.3 deals with the damaged caused by, and costs of, private car transport and draws conclusions. This is, however, unacceptable for two reasons:

a) the Commission White Paper on fair pricing deals with lorry and commercial passenger transport but not private cars. Point 3.1.3 of the opinion deals exclusively with cars however;

b) the whole of point 3.1 is concerned with road transport. Lorry transport and commercial passenger transport are not mentioned however.

Result of the vote

For: 27; against: 46; abstentions: 7.