David Briginshaw, Editor-In-Chief

Taxing rail is fuelling climate change

THE complex and thorny issue of the funding and taxing of rail transport and its competing modes was raised by Mr André Navarri, chairman of the European Railway Industries Association (Unife), at the 6th World Congress on High-Speed Rail organised by the International Union of Railways (UIC) in Amsterdam. Navarri wants the European Union (EU) to take urgent action to put rail on a more equitable basis compared with other modes.

“If Europe really wants to meet its ambitious target to reduce CO2 emissions by 20% by 2020, the EU needs to decide on a legal framework where the train is no longer punished with energy taxes and VAT [sales tax] on tickets while the plane receives full tax exemptions on fuel and VAT,” Navarri said.

A report from the European Environment Agency entitled Climate for a Transport Change published in March says that transport emissions (excluding international air and sea transport) in the current 27 EU member states grew by 26% between 1990 and 2005 and now account for 22% of all EU emissions. However, rail emissions fell by 42% while road emissions grew by 29% and domestic air emissions by 39%. “Had transport sector emissions followed the same reduction trend in society as a whole, total EU greenhouse gas emissions between 1990 and 2005 would have fallen by 14% instead of 7.9%,” says the report.

“Transport tends to outperform other industrial sectors in terms of emissions and will continue to do so if we do not change, and this will wreck the EU emission reduction target,” warns Mr Michael Clausecker, director general of Unife. “We believe that transport should be the central focus of the EU’s efforts.”

Clausecker says there must be a strong modal shift in favour of rail, which pollutes the atmosphere a lot less than road and air, but this will only happen if there is a level playing field between the modes. The problem is that while some measures are being taken, they do not go nearly far enough and often they are voluntary and therefore ineffective.

The EU’s recently-revised Eurovignette Directive is a case in point. This specifies the maximum tolls that EU member states can impose on trucks of more than 3.5 tonnes using specific EU-designated trans-European highways, but does not oblige member states to impose them.

This is where the initiative comes unstuck. The problem is that countries in western Europe tend to charge road hauliers between Euros 0.10 and Euros 0.20 per kilometre and have relatively low rail access charges, whereas countries in eastern Europe impose virtually no charges on road hauliers but have relatively high rail access charges.

Another major difference between eastern and western Europe is that in the east rail access charges are much higher for freight than passenger operators, often double and in two countries four times higher. In western Europe, passenger and freight rail access charges are often similar or, in the case of France, passenger charges are three times higher than for freight. This makes it easier to stimulate railfreight in western Europe, while making road more attractive in the east.

While it will be very difficult to harmonise rail access charges across Europe, because each country funds its national rail infrastructure manager differently, a start must be made to have a level playing field between modes in each country. This would help to redress the imbalance between rail and road in eastern Europe.

Unife wants to see a reduction in the high tax burden that railways in some countries are under so that all modes are treated equally. Unife is particularly scathing about air transport which does not have to charge sales tax on international tickets and receives its fuel tax-free. This tax advantage has no doubt helped fuel the explosion in air travel that is taking place across Europe. Britain, France and the Netherlands have introduced air ticket taxes, but most countries have not.

Unife wants the EU to make further reforms to the Eurovignette Directive that would better reflect the principle that the greatest polluter pays the most. It also wants any money raised from road transport taxes to be used for investment in rail transport.

These are all laudable aims, but at the moment there seems little sense of urgency on the part of politicians to effect meaningful change. But EU bureaucrats and rail lobby groups do their cause no good when they pepper their arguments with terms that few people understand, the worst being “the internalisation of external costs.” Clarity is essential in any argument.