Road pricing on a European scale.

This paper presents an argument to support the theory that electronic road pricing applied throughout Europe will eliminate present problems of harmonisation of taxes and financing infrastructure. Road users pay in most countries an annual tax related to type of vehicle and a fuel tax. Sometimes there are special taxes on new vehicles, and tolls for certain parts of the road system. Some of these taxes are earmarked to finance transport expenditure (not always on the road system only), but many of them just form part of the general tax burden. For international traffic, it is generally accepted that the annual vehicle tax is paid in the home country of the vehicle, and countries mutually exempt foreign vehicles from this tax. Tolls are of course always paid for use of the road to which they apply, and fuel taxes can only be paid in another country than where the fuel is used as far as the supply in the vehicle permits. This situation gives an advantage to vehicle owners resident in a country with a low annual vehicle tax, and a disadvantage to countries that see large numbers of foreign vehicles on their roads. It resulted in lengthy discussions on the need for harmonisation of taxes, that should precede any liberalisation of international road transport, and also in the introduction of special road user charges, that generally discriminate against foreign vehicles. The provision of all vehicles with a standardised electronic identity device will eliminate these problems. Every country can determine charges for use of its main road system as they think to be appropriate, and let users pay without any discrimination based on nationality. The country (or region) where the vehicle is registered, will collect all the charges incurred on behalf of the authority that has imposed them, and bill them regularly to the vehicle owner. The system is fully compatible with the abolishment of all frontier formalities in 1992, which implies that all vehicles should be able to move freely from one EC country into another.