This document considers the potential for reform of transport taxes in Europe. It is suggested that taxation nearer to the point of use and more closely reflecting the costs of transport would lead to better management of demand and raise revenue for transport schemes or other purposes. Studies to model optimal charges for transport in five countries suggests that more efficient charges would result in changes in relative prices and traffic levels. Higher charges for cars, lorries and vans would occur in urban areas and on some inter-urban routes while public transport charges would be lower. Rail freight and inland waterways freight would increase compared with road freight. Annual welfare gains of 9-17 billion Euros in each of the three largest European economies are predicted. Results from the Netherlands indicated that the biggest improvements in the management of congestion would be achieved by optimising prices rather than infrastructure capacity. More passengers would use public transport in urban areas. It is suggested that fixed cost transport taxes should be decreased and fuel taxes increased. Revenue from congestion charges could be used in the first instance to invest in traffic management systems and in increased infrastructure capacity in cases where economic and environmental assessments justify expansion.
Abstract