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Germany Needs to Keep its Autobahns Free

Leonid Bershidsky
(Bloomberg Opinion) -- Germany’s famed autobahns have lost an important source of funding. Their new management hoped the money would help them to ease congestion and restore the roads to their former glory.Historically free of charge, the highways are widely viewed as a symbol of freedom. The absence of speed limits on much of the country’s 13,000-kilometer network is part of the concept. So voters are vehemently opposed to the idea that the government should introduce tolls for passenger cars.But the government needs to raise more money from drivers to fund repairs to the network and ease its financial burden on the states. After many years of political bargaining, a plan was finally agreed with the European Union at the end of 2016 that would make everyone driving on the autobahns buy a so-called vignette.The owners of German-registered cars would, however, get a refund on their motor vehicle tax equivalent to the price of the ticket – up to 130 euros ($146). Foreigners would pay the full price. Vignette sales were scheduled to begin in October, 2020.On Tuesday, the European Court of Justice ruled in favor of Austria, which had complained the proposals violated the EU’s common market rules. Unusually, the court went against the advice of one of its advocates general. He had argued that the plan wouldn’t discriminate against foreigners since they are exempt from the Germany’s motor vehicle tax.The ruling kills the toll plan and puts the German government in a bind just as it is in the midst of an ambitious overhaul its motorways. Today, the network is financed by the federal government but maintained by the states. That system is being replaced: A government-owned company called Die Autobahn GmbH des Bundes was set up last year to take over the running of the entire network. The states are handing over 15,000 workers to the Berlin-based company. In March, Stephan Krenz, former managing director of the Dutch-owned public transport operator Abellio’s German branch, was appointed Autobahn’s chief executive officer.In an interview with the daily Frankfurter Allgemeine Zeitung last week, Krenz said he was comfortable his company would have enough money to maintain and expand the network even if Germany suffered an economic recession and the government earmarked less money for it.“We are less dependent on that,” Krenz said, “because most of the funding for the autobahns will come from users, through truck tolls and in the future through the passenger car vignette.”The vignettes were supposed to bring in about 3.85 billion euros a year, of which 3 billion euros would come from German car owners. Even though the government would have refunded that money to taxpayers, Autobahn GmbH would have still received the full payments minus the toll system’s operating costs of about 245 million euros a year. That would be equivalent to about a third of the autobahn network’s current maintenance and construction costs.The new company needs the money. The network is increasingly congested. According to ADAC, Germany’s automobile club with 18 million members, a record 745,000 traffic jams were reported on the highways last year with a combined length of more than 1.5 million kilometers. Drivers spent about 459,000 hours in them.Ubiquitous road repairs are a major reason for the congestion. They are, however, unavoidable because long stretches of the highways – especially bridges – are in a sorry state, in part because Germany hasn’t been generous with infrastructure funding under Angela Merkel’s chancellorship and in part because more spending would have meant more roadworks and more traffic jams.The German government evaluates the quality of the roads every four years, and the latest assessment, carried out in 2017 and 2018, found 10.6% of the autobahn network was in urgent need of repair, compared with 10.1 percent in 2013-2014.Krenz’s plan is to widen sections of the network, so that roadworks create fewer jams, and install electronic gantries that would warn drivers of congestion and suggest detours. Both will be costly.Now, the government needs to find its way out of a problem: How can it introduce tolls when making German-registered drivers pay would be unpopular and charging only foreigners illegal? It won’t do simply to cancel the vignettes for foreign drivers and leave the rest of the plan in place. That would put Germans at a disadvantage. Simply funding road improvements and maintenance out of motor vehicle tax receipts might be the best solution. Car owners wouldn’t notice any change, and the autobahns would continue serving as an advertisement for Germany’s freedom of mobility, one of the country’s most attractive features in the eyes of locals and foreigners alike.To contact the author of this story: Leonid Bershidsky at lbershidsky@bloomberg.netTo contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Leonid Bershidsky is Bloomberg Opinion's Europe columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

(Bloomberg Opinion) -- Germany’s famed autobahns have lost an important source of funding. Their new management hoped the money would help them to ease congestion and restore the roads to their former glory.

Historically free of charge, the highways are widely viewed as a symbol of freedom. The absence of speed limits on much of the country’s 13,000-kilometer network is part of the concept. So voters are vehemently opposed to the idea that the government should introduce tolls for passenger cars.

But the government needs to raise more money from drivers to fund repairs to the network and ease its financial burden on the states. After many years of political bargaining, a plan was finally agreed with the European Union at the end of 2016 that would make everyone driving on the autobahns buy a so-called vignette.

The owners of German-registered cars would, however, get a refund on their motor vehicle tax equivalent to the price of the ticket – up to 130 euros ($146). Foreigners would pay the full price. Vignette sales were scheduled to begin in October, 2020.

On Tuesday, the European Court of Justice ruled in favor of Austria, which had complained the proposals violated the EU’s common market rules. Unusually, the court went against the advice of one of its advocates general. He had argued that the plan wouldn’t discriminate against foreigners since they are exempt from the Germany’s motor vehicle tax.

The ruling kills the toll plan and puts the German government in a bind just as it is in the midst of an ambitious overhaul its motorways. Today, the network is financed by the federal government but maintained by the states. That system is being replaced: A government-owned company called Die Autobahn GmbH des Bundes was set up last year to take over the running of the entire network. The states are handing over 15,000 workers to the Berlin-based company. In March, Stephan Krenz, former managing director of the Dutch-owned public transport operator Abellio’s German branch, was appointed Autobahn’s chief executive officer.

In an interview with the daily Frankfurter Allgemeine Zeitung last week, Krenz said he was comfortable his company would have enough money to maintain and expand the network even if Germany suffered an economic recession and the government earmarked less money for it.

“We are less dependent on that,” Krenz said, “because most of the funding for the autobahns will come from users, through truck tolls and in the future through the passenger car vignette.”

The vignettes were supposed to bring in about 3.85 billion euros a year, of which 3 billion euros would come from German car owners. Even though the government would have refunded that money to taxpayers, Autobahn GmbH would have still received the full payments minus the toll system’s operating costs of about 245 million euros a year. That would be equivalent to about a third of the autobahn network’s current maintenance and construction costs.

The new company needs the money. The network is increasingly congested. According to ADAC, Germany’s automobile club with 18 million members, a record 745,000 traffic jams were reported on the highways last year with a combined length of more than 1.5 million kilometers. Drivers spent about 459,000 hours in them.

Ubiquitous road repairs are a major reason for the congestion. They are, however, unavoidable because long stretches of the highways – especially bridges – are in a sorry state, in part because Germany hasn’t been generous with infrastructure funding under Angela Merkel’s chancellorship and in part because more spending would have meant more roadworks and more traffic jams.

The German government evaluates the quality of the roads every four years, and the latest assessment, carried out in 2017 and 2018, found 10.6% of the autobahn network was in urgent need of repair, compared with 10.1 percent in 2013-2014.

Krenz’s plan is to widen sections of the network, so that roadworks create fewer jams, and install electronic gantries that would warn drivers of congestion and suggest detours. Both will be costly.

Now, the government needs to find its way out of a problem: How can it introduce tolls when making German-registered drivers pay would be unpopular and charging only foreigners illegal? It won’t do simply to cancel the vignettes for foreign drivers and leave the rest of the plan in place. That would put Germans at a disadvantage. Simply funding road improvements and maintenance out of motor vehicle tax receipts might be the best solution. Car owners wouldn’t notice any change, and the autobahns would continue serving as an advertisement for Germany’s freedom of mobility, one of the country’s most attractive features in the eyes of locals and foreigners alike.

To contact the author of this story: Leonid Bershidsky at lbershidsky@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Leonid Bershidsky is Bloomberg Opinion's Europe columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.

For more articles like this, please visit us at bloomberg.com/opinion

©2019 Bloomberg L.P.