WRITTEN QUESTION E-3818/02

by Erik Meijer (GUE/NGL) to the Commission

(9 January 2003)

Subject: The competitive position of public transport and the effect of taxation of fuels, infrastructure and ticket sales

1. Is the Commission aware of the request by the EU Committee of the Union Internationale des Transports Publics (UITP) concerning its document 10979/02 of 22 July 2002 on climate protection and harmonisation of energy taxes, which draws attention to the importance of public transport in protecting the environment and the financial obstacles which such transport is likely to encounter if it is treated on a par with car transport for purposes of taxation?

2. Does the Commission agree with the UITP's prognosis that the competitive position of public transport will deteriorate because it is already the case in nine of the 15 EU Member States, and from 2007 will be the case in all of them, that diesel fuel for public transport in urban areas may no longer be exempted from tax, while moreover urban tram and underground train networks are not regarded as railways, for which exceptions may be made?

3. Does the Commission consider that, even now, electricity, natural gas and LPG can render the use of diesel fuel in urban public transport completely superfluous, and that moreover it is impossible to achieve the same environmental effect using modern diesel technology as with natural gas or LPG, so that from the point of view of environmental protection it is defensible permanently to place diesel at a disadvantage and to ban it?

4. If it is unavoidable that diesel should continue to play a part in urban public transport for the time being, how will the Commission prevent the public transport which uses it from being placed at a competitive disadvantage in relation to motorised private transport, which is far more damaging to the environment?

5. What other taxes help to prevent the expansion of public transport, such as VAT and levies on infrastructure, and to what extent do they differ between Member States?

6. What else will the Commission do in the field of harmonisation of taxation in EU Member States to give public transport an advantage over air transport and motorised private road transport?

Answer given by Mrs de Palacio on behalf of the Commission

(28 February 2003)

The Commission is aware of UITP's position paper. It shares UITP's view that environmental objectives demand a growing role for public transport.

The Commission does not share UITP's view that public transport operators' competitive position will necessarily worsen as a result of changes in energy taxation.

At present, Member States may exempt public transport operators from excise duties on mineral oils, or reduce the rate of the duties. After 2007, the situation will depend on the draft Directive on the taxation of energy products(1) which is currently under consideration. Regardless of the final outcome of this process, it is important to emphasise that the key determinant of public transport operators' competitive position is not their fuel costs but the use they make of their most important and costly asset their staff. In many cases there is a good deal of room for improvement here. The Commission's draft Regulation(2) on public services in public transport will, if adopted, encourage this.

Many public transport services receive financial compensation from public authorities. In one sample of 24 cities in the Member States, this covered 48 % of operating costs. In general, this compensation should increase if taxation of fuel raises the cost of providing the services. The proceeds of the taxation could be used to cover this cost.

The Commission does not consider that electricity, natural gas and Liquified Petroleum Gas can render the use of diesel fuel in urban public transport completely superfluous for the time being. The Commission's objective for 2020 is to replace 20 % of the diesel and petrol used for road transport with alternative fuels. The new fuels should enhance security of supply and reduce greenhouse gas emissions without increasing emissions of pollutants. The Commission believes that biofuels, natural gas and hydrogen will play the biggest part. The question of the proportion of these fuels that will be consumed by (a) specialised urban vehicles such as buses and (b) ordinary cars and lorries needs more study. So does the question of the impact on emissions of greenhouse gases and pollutants of a switch from diesel to natural gas. The Commission has asked an Alternative Fuels Contact Group (of which UITP is a member) to advise on these questions among others. A first report is expected in the coming months. However, the Commission believes it unlikely that diesel will cease to be an important fuel for buses in the medium term.

The Member States have adopted a wide range of taxes that affect public transport operators and competing modes of transport such as cars. According to the information available to the Commission, notably a study led by Oscar Faber in 2000, certain tax provisions provide incentives for sustainable mobility while others provide disincentives.

Charges and taxes identified by the study that promote the development of public transport include employee taxes; property taxes, developer levies; parking charges; road user charges, local motor taxes, and consumption taxes.

In the case of VAT, Member States have the right to subject passenger transport companies to a reduced rate or exempt them altogether.

The Commission does not intend to submit a specific proposal on the taxation of aircraft fuel, as in its opinion this issue is sufficiently covered by its proposal on taxation of energy products.

(1) OJ C 139, 6.5.1997.

(2) OJ C 365 E, 19.12.2000.