Germany considering congestion charges and vignettes, to raise money

Background

In the road pricing world, Germany is best known for one system - the LKW-Maut truck toll which charges all trucks 12 tonnes and above according to distance travelled on all motorways and some secondary highways.  It was the first such system ever to use GPS technology as the primary measurement of distance as the chargeable event (distance charging existed elsewhere, but used other technologies).   That toll is now being extended to a far wider network of highways as follows:

• for which the Federal Government is responsible in terms of construction and maintenance,
• that do not pass through built-up areas,
• having two or more lanes in each direction,
• whose carriageways for the two directions of traffic are separated on their entire length by central reservations or any other structures,
• that are at least 4 kilometres long and
• that are directly linked to a federal motorway.

Beyond that, there are a small handful of toll roads, but for private vehicles, the charge almost all face is simply fuel tax and motor tax (an annual ownership tax).

No German city has congestion charging.

Congestion charging?

According to the German international broadcaster Deutsche Welle, 16 state transport Ministers who met in October 2012 have decided to "investigate the options for municipalities to introduce congestion charges."

However, the report quotes one Minister as saying that cities need to find new sources of revenue, indicating that what they really want is a tax, that delivers other positive outcomes.  

The German automotive lobby is known to be adamantly opposed to tolling, to the point that there are very few toll roads in Germany for cars (the LKW-Maut truck toll system is a different matter).   Ulrich Klaus Becker, vice-president of the German automobile club ADAC was opposed on the grounds that it just added costs to motorists.

The report then makes a very blunt claim that such charges could have a negative economic impact:

Economy experts also warn of how a congestion charge could negatively affect commerce, pointing out that German drivers already pay a total of more than 53 million euros in motor vehicle taxes, petroleum taxes and other dues. Herbert Schulte, of the German Association for Small and Medium-sized Businesses, blames the lack of money for road construction on a poor distribution of funds.

There can always be a sound argument about the existing uses of taxation, although the "million" in that report is actually a "billion".  None of the fuel taxation in Germany is hypothecated for transport spending, but there is a better argument that can be made, about whether it would be better to replace some existing taxes with forms of road pricing.

The report continues to say that the mayor of Tübingen, in the southern state of Baden-Württemberg, Boris Palmer, wants a one euro charge to enter the inner city, although it quotes "traffic expert Michael Schreckenberg" who believes it wouldn't generate that much money.

Renowned expert, Andreas Kossak, who runs his own business AK Research and Consultancy, was an advisor to the commission and says that the work that has been done has been primarily about congestion charging for traffic management and environmental protection purposes, with revenue being secondary, and that German news reports seem to have distorted this.  

Germany already has low emission zones

German cities have introduced limited access zones in some cities, basically being low emission zones that restrict vehicle movement for environmental reasons.  They are endorsed at the Federal level and so effectively provide some traffic control, but only raise some revenue from fines, which essentially means they are self funding.   48 cities/city-regions have implemented such zones (a list in German is here).  As an example, the one in Berlin is described on this site  (English here). A leaflet for foreign tourists in English also explains what users need to know.  It applies to both German and foreign registered vehicles.

Berlin Low Emission Zone

Only vehicles with a Euro 4 (or retrofitted Euro 3) rating are permitted to be driven in the low emission zone.  It is enforced by requiring all vehicles to have a sticker that depicts the emissions rating of the vehicle.  The sticker is applicable across Germany, but issued locally and available online.  Foreign registered vehicles in the category below that are also allowed (Euro 3 or retrofitted Euro 2) until the end of 2014.  A fine of 40 Euros is issued to any vehicle found to have entered the zone without the correct sticker.  It applies to both cars and commercial vehicles, including all trucks.  Coaches are also included, although there is an exemption for Euro 3 vehicles that get a certificate that they cannot be retrofitted technically.

There are exemptions for cars with passes for the severely disabled, specified vintage vehicles, mobile equipment and machinery, motorcycles and three-wheeled vehicles, emergency vehicles, military vehicles and refuse collection vehicles (and a handful of other minor categories).   The zones apply 24/7, that means there is no period at all during which higher emission vehicles are permitted to operate

It covers an area of 88 square kms, bounded by the orbital suburban rail line in the city.  Reports of its success indicate particulates have dropped by more than 50% and nitrogen oxide emissions by 20%. 

With so many of these in place, it wouldn't be technically too difficult to convert many into congestion charging zones, although sticker based enforcement (in the case of Berlin) is not exactly what is needed.  However, any such charges should be based on targeting congestion where it is at its worst, rather than adopting a simple scheme option because it is easy to implement.

Baden-Württemberg's transport minister Winfried Hermann (Greens) is in favour of it, according to one report.

Vignettes

While debate continues at the state and city level, the Federal German Transport Minister Peter Ramsauer (CSU), is advocating a vignette for cars to use the motorways and major highways.  This would correspond to the LKW Maut truck toll that charges by distance on such roads for vehicles over 12 tonnes.  Austria has a similar pairing of charging for its motorways, with distance charging for vehicles over 3.5 tonnes, and a vignette for those below that.  Belgium is looking to introduce a vignette for light vehicles, and Hungary, the Czech Republic, Slovakia, Bulgaria, Romania and Slovenia all have a vignette.

The vignette is essentially a pre-paid access charge to use a network of roads.  A motorist can typically buy three products. An annual charge, a monthly charge or one for a period ranging from 4 days to 2 weeks, depending on the country.  For German residents, they would need to decide if they use the motorways sufficiently to buy an annual charge or not.  Foreigners would also have to purchase such a vignette.  Given that Germany has considerable numbers (although proportionately not high relative to domestic traffic) of foreign registered cars using its roads, in theory it could recover tens of millions of Euros of revenue from foreign vehicles - it could correspondingly reduce vehicle ownership taxes, so that German citizens did not have to pay more.  The argument being that German citizens face vignettes in many other European countries (or tolls), but those residents don't face such charges in Germany.

Given that Germany faces Federal elections this year, it appears that the CSU is continuing to advocate a vignette, with offsetting tax cuts, the CDU is willing to consider it, but the FDP is opposed.  I suspect any decisions regarding vignettes will not be made until after the election.

Conclusion

It is clear that the big undercurrent in Germany regarding charges is about revenue.  Congestion charges could deliver that, but be unpopular particularly if motorists see them being driven about money, not managing congestion.  Vignettes could deliver some as well, but are unlikely to be accepted by many unless they get a corresponding cut in other taxes.  It would also have to be designed in a way that ensured that motorists who chose not to buy the vignette did not congest roads that were not subject to it.  Germany is adept at doing this with the LKW-Maut now (having added non-motorway, highways to the charged network purely for this purpose).

Standing back from this, there needs to be a consideration at Federal and State levels as to what they want their highway networks to deliver.  This means being strategic about future investment (including taking cold economic decisions about what improvements are worth proceeding with), about adopting best practice asset management systems to optimise expenditure on maintenance, and then what revenue is needed to pay for it, and from what road users.  The LKW-Maut is an excellent starting point, as are the low emission zones, which appear to have delivered on what they have promised.  However, the discussion is now moving towards wider reforms.  In that field, replacing part of vehicle ownership taxes with a vignette may be a useful step forward, but a bigger step would be intelligent discussion about the future of fuel taxes.  

At the political level, I'd encourage cities and states to pursue their own solutions, but Federally the new Federal Government should be bold in terms of setting a strategy for better charging of roads.   That should have economic, revenue and environmental dimensions to it, and not be afraid to talk about the options that get instant opposition - by talking about tax reform, not new charges.