OPINION OF THE ECONOMIC AND SOCIAL COMMITTEE on infrastructure costs in the road freight transport sector as a basis for comparison with other transport modes
Date: 1995-10-25
Institutions: European Economic and Social Committee
Subjects: approximation of laws, carriage of goods, charges for use of infrastructure, transport infrastructure, transport policy













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51995IE1159

OPINION OF THE ECONOMIC AND SOCIAL COMMITTEE on infrastructure costs in the road freight transport sector as a basis for comparison with other transport modes  


Official Journal C 018 , 22/01/1996 P. 0027 





Opinion on infrastructure costs in the road  freight transport sector as a basis for comparison with other transport modes(96/C 18/08) On 30  March 1995, the Economic and Social Committee, acting under Rule 23(3) of its Rules of  Procedure, decided to draw up an Opinion on infrastructure costs in the road freight transport  sector as a basis for comparison with other transport modes. The Section for Transport and Communications, which was responsible for preparing the Committee's  work on the subject, adopted its Opinion on 29 September 1995. The Rapporteur was Mr Kielman. At its 329th Plenary Session (meeting of 25 October 1995), the Economic and Social Committee  adopted the following Opinion unanimously. 1. Introduction1.1. The excise duties on mineral oils were harmonized to a certain  degree by Council Directives 92/81/EEC and 92/82/EEC, while Council Directive 93/89/EEC of 25   October 1993 laid down minimum rates for the vehicle taxes on heavy goods vehicles. The latter also  specified that two or more Member States may cooperate for the purpose of introducing a common  system of user charges for (motorway) infrastructure on their territory. The Benelux countries,  Germany and Denmark have introduced such a system this year - the so-called 'Eurovignette' system. 1.2. This Own-initiative Opinion will evaluate infrastructure costs in relation to how heavy goods  vehicles are charged for the use of infrastructure. In addition, in anticipation of a Green Paper  due to be published by the European Commission in mid-1996, the external costs and benefits of  different forms of transport should be considered. The Opinion is intended to make a significant  contribution to the development of a comprehensive, fair and balanced system for the allocation of  infrastructure (and external) costs to the different transport modes, with a view to the  establishment of equivalent terms of competition. 1.3. A number of examples illustrate the usefulness of this evaluation: - The European Commission regards the application of the principle of territoriality as its  ultimate goal. This means freight vehicles will be charged in proportion to the use they make of  infrastructure. - Distortions of competition must be abolished within and between modes. Infrastructure costs must  be passed on in full to the user, unless infrastructure also has a function which is not  transport-related. In principle, tolls represent an application of the principle of territoriality.  They must not, however, constitute a double charge in conjunction with vehicles taxes and excise  duties. The Committee has already called for the abolition of current tolls when existing  agreements expire. - Strict application of the principle of territoriality requires knowledge of the fixed costs,  variable costs and the external costs and benefits associated with (the use of) infrastructure. It  is difficult to quantify infrastructure costs and even more difficult to quantify external costs  and benefits. External effects are the non-price-related consequences for consumer prosperity and  production potential of the economic activities of others (in this case, infrastructure users).  External costs are negative external effects expressed in money terms; external benefits are  positive external effects expressed in money terms. Government intervention is not generally  necessary in the case of external benefits since these are expressed via the market-price  mechanism. No further reference will therefore be made to these benefits in the remainder of this  document. - The 'Eurovignette' system can be regarded as an interim solution. Under this system, which takes  no account of distances covered, all heavy goods vehicles are charged - in addition to the vehicle  taxes and excise duties - a tax for the use of the infrastructure in the participating countries.  All vehicles are charged the same, and compensatory payments are then made by the participating  countries' authorities, on the basis of each country's road transport statistics. This is an  example of the principle of territoriality, which contributes to the abolition of distortions of  competition between carriers from different countries. 1.4. In its Opinions of 24  April 1991 () and 25 November 1992 () on infrastructure costs  (Rapporteur: Mr Moreland), the Committee endorsed the following Commission objectives: - the elimination of distortions of competition within and between transport modes; - the passing-on of all infrastructure costs to the user; - measures to ensure adequate tax revenues for the Member States; - freedom of movement for goods and persons within the Community; - fair transit agreements with non-Member States. 1.5. In so doing, the Committee stressed the following points: - a charging system based on the principle of territoriality should provide a satisfactory  long-term solution, although certain practical problems would have to be faced; - current road tolls should, in principle, be abolished when existing agreements expired. An  exception can be made where infrastructure projects are financed as if they are investments (bridge  and tunnel tolls, ferry charges); - the solution adopted must not further complicate tax collection or increase red tape. 1.6. The report of the Committee of Enquiry on the road freight transport sector in the European  Community (Road Freight Transport in the Internal Market: Committee of Enquiry Report,  July 1994)  states that: - infrastructure and external costs must be passed on; - the system(s) of charges must be used to cover the costs allocated; - this should be separated from a system of charges exclusively designed to generate revenue; - territoriality must be the underlying principle; - this principle must be enshrined in EU legislation; - a user charge represents the most appropriate form of taxation, insofar as road use can be  measured; - where this is (still) not possible, a combination of vehicle taxes and mineral-oil excise duties  would offer the best alternative. 2. Reasons for the Own-initiative Opinion2.1. Current measures do not make for an optimum  solution. A closer look will be taken, on the basis of existing documentation, at the subject of  infrastructure costs and external costs (see point 1.3 for definitions). The different  infrastructure and external costs of different modes of transport can lead to unfair competition if  they are not imputed fully. Examples of external costs are: pollutant emissions and noxious smells,  noise damage, traffic accidents, congestion, parking problems (obstructions, reduced visibility)  and damage to the landscape. Some of these external costs are easier to quantify than others.  Broadly speaking, the following methods for determining external costs can be distinguished: - The remedial costs method: Here the costs of eliminating or reducing external effects are  established. - The preferences method: This involves an examination of the direct impact of external effects on  free market prices (e.g. reduced property values) or a more subjective approach based on public  surveys (how much should be reserved for the reduction of an external effect?). - The preventive expenditure method: This involves determining the costs of preventing the external  effect. In general, one method is particularly suited to the determination of each type of external cost.  Nevertheless, it is impossible - or virtually impossible - to calculate some external costs (e.g.  climatic changes), regardless of the method used. 2.2. The Opinion will attempt to clarify how the methods used to apply the principle of  territoriality are interrelated. The European Commission's plan to publish a Green Paper in 1996 is  a further reason why this Opinion should be drawn up. 2.3. All transport modes' infrastructure costs should be allocated in like manner. For the purpose  of charging, it is desirable for these costs to be calculated in advance. 3. Background3.1. At present, neither the European Commission nor the national governments are  fully conversant with the methods for allocating infrastructure costs and the data available. 3.2. The problem of infrastructure costs involves the following elements, in particular: - definition of the concept; - calculation on a national basis (methodology); - collection of the necessary data; - allocation in accordance with nationality of carrier; - allocation of (infrastructure) costs to the freight transport sector or other road users; - the need to consider the road infrastructure function in conjunction with the use of other  transport infrastructure; - allocation of infrastructure costs with reference to distance and time. 3.3. It is important, without going so far as to provide a formal definition of infrastructure  costs, to define the term as a basis for a comparison of different transport modes' infrastructure  costs. Infrastructure comprises the following elements: - civil engineering works (roads, railways, canals) and associated structures (viaducts, bridges,  locks, culverts, etc.); - harbour facilities (landside and waterside) and access routes; - traffic control, guidance and safety facilities (signs, guidance systems, crash barriers,  notice-boards, traffic police, river police, transformers and power transmission, etc.). Infrastructure costs can be broken down as follows: - investment costs, i.e. the costs incurred in building infrastructure, including depreciation  costs and interest charges; - maintenance and upgrading costs (management costs); - policing costs i.e. the costs of traffic, river and railway police; - overhead costs. 3.4. Investment, maintenance, policing and overhead costs must be established for each country  (PROBLEM 1). In view of the great difficulty of defining overhead costs and the virtual  impossibility of achieving a uniform approach to them in each country, this item is not generally  included in the calculation of infrastructure costs. 3.5. It seems advisable to distinguish the first three cost categories with reference to road type,  i.e. motorways, major roads, regional/local roads and roads in built-up areas. Although this  distinction is not strictly necessary for calculation purposes, it is far easier in practice to  establish the costs of motorways and major roads than of local and urban roads. This breakdown by  road type limits the (undoubtedly necessary) estimation of non-available data. The following  additional points also need to be taken into account: - differences exist in the intensity of use, not only with regard to road type but also over time  (peak/off-peak periods); - different average traffic speeds can give rise to differences in infrastructure costs; - differences in temperature, climate, roadbed type, etc. are also important; - motorways are better suited to take freight traffic than major and local roads. The transport of dangerous substances poses another problem. Additional infrastructure facilities  are sometimes provided in order to allow, facilitate or protect such shipments. It is theoretically  possible, though difficult in practice, to allocate these costs to the special vehicles used for  this type of transport. 3.6. The following are some of the difficulties encountered in establishing actual infrastructure  costs: - It is difficult to determine the costs of old roads. A capitalization method must be applied in  each case and this raises questions with regard to such issues as the depreciation period and  interest rate to be adopted. A uniform depreciation period must be applied in the interests of  comparability, although there is still the problem of how to evaluate existing roads. - The same principles must apply to all transport modes in the interests of optimum comparability  (a pre-requirement for the establishment of fair competitive conditions). - Road-building and maintenance are not subject to the same quality standards in all the Member  States. Should these national standards be retained or is a uniform, non-discriminatory evaluation  procedure necessary in order to ensure an optimum comparison?- The existence of different national  definitions and variations in the available data (e.g. not available for all roads or for recent  years). - The determination of policing costs constitutes a problem in itself and this is aggravated by the  absence of statistical data. - There is a marked variation in the availability of figures between, and even within, individual  countries. In the Netherlands, for example, motorway costs can be easily calculated, whilst  infrastructure costs in built-up areas remain unquantified or poorly quantified. Standard rates  (e.g. per km per road surface) will have to be applied in this case. 3.7. A method must be defined for the allocation of infrastructure costs to the road freight  transport sector on the basis of the principle of territoriality, under which costs are allocated  to the individual infrastructure user. As long as direct allocation to the individual user is not  (technically) possible, countries must compensate each other. For this, statistical data on carrier  nationality will be required. In allocating costs, problems exist with regard to: - allocation to different vehicle categories, including charging road freight transport for its  share and a uniform method of measurement (PROBLEM 2); - allocation to domestic or international carriers or the breakdown of kilometres travelled in each  country on the basis of carrier nationality (PROBLEM 3). 3.8. The allocation of infrastructure costs to vehicle categories should be based on such variables  as: - vehicle kilometres; - total vehicle weight; - number of vehicle axles. 3.9. In determining costs, it must be borne in mind that: - heavy lorries account for a disproportionate share of road-building and maintenance costs; - a tax based on total vehicle weight and the number of vehicle axles must therefore be imposed to  cover infrastructure costs; - this tax can best be levied in accordance with the principle of territoriality as a variable  charge per kilometre. A variable charge in the form of a mineral-oil excise duty has the  disadvantage that it can sometimes be circumvented if vehicles are not refuelled in the relevant  country. 3.10. Any attempt to find a solution must focus on the three above-mentioned problems: - Problem 1 concerns the establishment of a method for determining investment, maintenance,  policing and, as far as possible, overhead costs. Taken together, these constitute total  infrastructure costs. - Problem 2 concerns the allocation of infrastructure costs to different vehicle categories and the  establishment of a clear method for charging road freight transport for its share. - Problem 3 concerns the breakdown of kilometres travelled in each country on the basis of carrier  nationality. 4. Road transport, inland shipping and rail transport4.1. In order to eliminate distortions of  competition and to ensure the complete harmonization of the allocation of infrastructure costs to  the freight transport sector, it is essential for the infrastructure costs of all modes - road  transport, inland shipping, rail transport, sea transport and air transport - to be passed on in  full and in a uniform manner. This document focuses on the three inland modes since these can be in  direct competition with each other. 4.2. In addition to infrastructure costs, the external costs of all transport modes must be passed  on. 4.3. Each mode has its specific characteristics which, in a sense, make them unique and (in some  respects or circumstances) make them difficult, if not impossible, to compare. As a result, a  comparison of only the infrastructure costs of road, water and rail transport produces an  incomplete picture. 5. ConclusionInfrastructure and external costs should be fully allocated to the different modes  in a fair, uniform manner. Internalization of these costs can help the transport modes to achieve  optimum infrastructure use. This can also make it possible to achieve an optimum modal split. The  corresponding administrative work should be kept to a minimum. The determination of infrastructure and external costs and their allocation to the transport modes  involves the following problems: - the methodology used to determine these costs; - the acquisition of the necessary data; - the need for agreement on the constituent elements of infrastructure and external costs; - the need for countries to operate a system of compensation as long as the direct allocation of  costs to the individual user is not (technically) possible. Done at Brussels, 25  October 1995. The Presidentof the Economic and Social CommitteeCarlos FERRER() OJ No C  159, 17. 6. 1991, p. 18.  () OJ No C 19, 25. 1. 1993, p. 71.