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Internalisation of external costs can place a 414 billion euro burden on the EU economy per year, while profiting only two EU countries

Date

09 Sep 2010

Sections

Transport

A new ProgTrans study concludes that only two Member States will benefit from extra wealth and national income from the internalisation of external costs whereas most EU Member States will end up paying much more than they will receive. Road charges, when including excessive external costs, can reach up to 436 billion Euros per year, yet without generating any effective action aimed at removing the externalities by earmarking the charges to effectively reduce road transport’s environmental impact.

Brussels – ProgTrans today presented the results of a study on the economic impact of the internalisation of external costs on individual EU Member States and the European road haulage industry, which reveals that:

    * in 2009, the road haulage industry already paid 15 billion euro in road user charges;

    * costs generated by the internalisation of the external costs would be 5 to 414 billion euro per year, depending on the year and charging scenario;

    * adding the internalisation of external costs to current road user charges would result in a total burden on the EU economy of 20 to 436 billion euro per year. 

ProgTrans calculated these figures by simulating road user charges levied by all EU Member States, based on real transport flows; transport forecasts for 2020 and 2030; and various European Commission scenarios for the internalisation of external costs[1] .

IRU EU Goods Transport Liaison Committee President, Alexander Sakkers, commented: “The ProgTrans study further questions the cost-benefit analysis of the European Commission proposal revising the Eurovignette Directive. It highlights major economic pitfalls and flagrant discrimination towards the road freight transport sector, which today ensures over 90% in value of all  trade distribution in the EU and which already pays for close to 100% of its externalities, through existing road user charges, taxes and duties.”

When balancing each Member State’s revenues collected from national and foreign hauliers against related costs for their national trade[2], the ProgTrans study further reveals that:

    * only two countries – France and Germany - would profit from the internalisation of external costs regardless of the study year and scenario;

    * 16 countries would face serious losses of national income;

    * the remaining 9 countries would experience various outcomes, yet with overall quite large losses of national income in most years and scenarios. 

Unlike what is commonly believed, the vast majority of EU Member States will suffer huge losses in their national budgets, not to mention the additional costs imposed on the economy as a whole, which would lead to a smaller tax base. In contrast, Germany and France, as the only profiting countries, would be able to provide a general tax rebate of up to 43 billion Euros.

“It is simply unacceptable that such a proposal could pass without considering the real impacts on the European economy as a whole and at national level. Moreover, is it worth keeping a proposal which will clearly not solve the externalities caused by all transport modes, including rail, maritime, in-land waterways and air? Rather, current debates in the Council of Ministers should focus on earmarking revenues stemming from current charges, taxes and duties paid by the various modes to effectively remove, or at least significantly reduce their respective externalities,” Alexander Sakkers concluded.

Read the Executive summary or download the full ProgTrans study

See the IRU detailed observations on the EU proposal on internalising external costs

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