TAXING MATTER

Detour Ahead: German Road Toll Plan Slammed

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A sign on a German motorway that indicates to truck drivers that they are paying toll on this road. Will this sign soon also apply to foreign drivers?
  • Why it matters

    Why it matters

    Billions of euros are needed to pay for German road improvements and expansion. But there aren’t enough answers to many roadblocks to the toll ahead.

  • Facts

    Facts

    • The proposed toll is estimated to generate about €2.5 billion every four years.
    • The new toll is now proposed to take effect on Jan. 1, 2016.
    • According to the transportation minister’s proposal, all car drivers would pay an average of €88 ($120) a year. For Germans, the cost would be offset by vehicle tax savings.
  • Audio

    Audio

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Elmau Castle is among the finest accommodations in Germany. What better place to sweep away worries and cares than in a spa at this five-star hotel or on a hike at the foot of the surrounding Bavarian Alps?

At this luxury retreat over the weekend, Alexander Dobrindt, Germany’s transport minister, hosted Siim Kallas, his counterpart for transportation affairs at the European Commission. They wanted to talk informally about Mr. Dobrindt’s proposed passenger car toll on foreign drivers. Mr. Kallas has preached for months that any new toll would be OK – as long as it doesn’t discriminate.

The German transport minister is hoping for Mr. Kallas’ help on an issue that has taken a lot of heat recently – not just from opponents but from members of his own Christian Social Union, or CSU, the Bavarian faction of Chancellor Angela Merkel’s Christian Democratic Union, CDU. He is tasked with implementing a toll on highways that should not burden Germans − something he and CSU-head Horst Seehofer have been calling for during the federal election campaign last year.  The coalition agreement agreed last year bewteen Ms. Merkel’s CDU and her coalition partner the Social Democrats, SPD, called for the realization of the road tolls, but said it all must comply with European Union laws.

Critics warned it would threaten businesses along Germany’s borders.

As now proposed, all car drivers would pay an average of €88 ($120) a year. For Germans, however, the cost would be offset by vehicle tax savings. The toll, which would take effect January 1, 2016, would generate about €2.5 billion in additional revenue over four years, Mr. Dobrint has said.

Talk about bad timing: Mr. Dobrindt presented his idea for “infrastructure charges” on all roads during the summer vacation season. Protests broke out immediately. Bavaria’s interior minister Joachim Herrmann, also a CSU member, warned it would threaten businesses along Germany’s borders.

 

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Most countries in Europe have already implemented passenger car tolls. Source: ADAC

 

High-ranking CDU politicians also protested publicly for weeks. Representatives from North Rhine-Westphalia – the largest bloc of CDU members in Germany’s parliament, the Bundestag – even rejected the proposal by a resolution. The clear message from many German states: Not so fast.

Wolfgang Schäuble, the German finance minister from the CDU party, is also wary of Mr. Dobrindt’s plans. According to a news report in German weekly magazine Der Spiegel, he is instead letting a modified concept be tested that would also burden domestic drivers in the long term, rather than just foreigners. It aims to win private investors for the building and operation of highways, who in turn would receive money that the toll generates.

As if that were not enough, neighboring countries have already threatened to file complaints before the European Court of Justice. Constitutional law experts give Mr. Dobrindt’s idea hardly a chance of standing up. After all, he only wants to burden foreigners with the toll, while relieving Germans from the passenger car tax.

German Chancellor Angela Merkel, herself an opponent of the toll, warned weeks ago that any law that was drafted would have to clear all European legal considerations.

 

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Wolfgang Schäuble, the German finance minister from the CDU party, is also wary of Mr. Dobrindt’s plans. Source: DPA

 

The road toll proposals contain highly explosive issues, especially for Mr. Schäuble. The finance minister’s concept would first lower the passenger car tax for each driver so that, in effect, no German would end up paying more. According to Mr. Dobrindt, that would cost about €4 billion. Only after that would Mr. Dobrindt introduce the toll – and wrest €600 million a year from foreign drivers. Were the European Commission then to declare the toll as incompatible with European Union laws, not only would the €600 million be missing from the finance ministry’s coffers, but also the €4 billion.

Still unproven is whether the passenger car toll would bring in as much money as estimated. Valerie Wilms, a representative of Germany’s Green party, asked the Department of Transportation to show how many foreign cars actually used German roads and what studies the department used to determine that. The department cited two surveys, one in 2002 and one in 2008.

But those surveys are outdated and might be inadequate to determine how much money would be raised. “The numbers are not well-suited for that,” a source told Handelsblatt.

So much remains in the dark, partly because Mr. Dobrindt hammered out his plan in a small circle. Representatives of parliament complain that they weren’t consulted, and officials from other government department also said they were left out.

Now is the time for parliamentary representatives and other government officials to raise their concerns. Mr. Seehofer, the Bavarian state premier and CSU head, said he is now ready to hear complaints from border regions. Officially, he said:  “I do not know of a better solution than (Mr.) Dobrindt’s concept.”

This article was translated by Anna Park Kim . To contact the author: delhaes@handelsblatt.com

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