It would be an understatement to say that mobility is an issue in our country. Brussels and Antwerp were recently named the worst places for traffic congestion, and the OECD has estimated that the economic cost of congestion, the environmental cost and the cost of accidents amounts to 1-2% of Belgium’s GDP. If no steps are taken to change the existing policy on mobility, the cost to society is bound to continue to increase. Research has shown that the cost to society could rise to as much as €6 billion by 2020.
“The ongoing reduction in mobility will be the biggest challenge for the automotive industry in the coming years”, states Thierry van Kan, Chairman of FEBIAC. FEBIAC wants to make a positive contribution to the debate on mobility, which is why it is proposing a package of measures today that are aimed at improving mobility – making it smoother, more fuel efficient, cleaner and more affordable for all, and reducing the cost to society without increasing the cost for users.
The federation believes that a smart distance-based charge offers an ideal way of improving mobility, but at the same time it is convinced that a charge of this kind will only be accepted by the public if certain criteria are met. These criteria include the reform and reorganisation of taxation in the area of mobility.
FEBIAC asked PwC to examine the feasibility of the proposals and calculate their impact on the existing mobility budget. The results have now been published in a report, “Slimme fiscaliteit voor betere mobiliteit”1 (“Smart taxation for improved mobility”), which is being presented today. The report concludes that there is in fact no reason why improved mobility has to mean higher costs for users and the state.
“Traffic congestion does not increase in a linear way,” Floris Ampe, Consulting Partner at PwC, explains. “Traffic soon becomes congested once a certain threshold has been passed. The reverse is also true. If, say, the number of cars during peak hours is cut by 5-10%, there is a disproportionately large fall of up to 40% in the duration and length of traffic jams. A small change in the behaviour of road users can thus have a major impact on congestion. Given this, the best thing to do is to persuade road users to modify their behaviour.”
The government can encourage changes in behaviour by introducing a mobility policy that focuses on removing the missing links affecting infrastructure and co-modality, making efficient use of the existing transport supply (including the road infrastructure and capacity) and providing appropriate tax incentives for users.
“In Belgium, the tax rules in the area of mobility are extremely complex”, states Thierry van Kan, Chairman of FEBIAC, “and we’re proposing that they be reformed and reorganised, by making changes to the way in which the budget is funded and spent. This will make it possible to influence the behaviour of users in a way that has a positive impact on mobility.” The proposal comprises three key tax shifts, which affect income and spending:
Currently, more than 50% of government income in the area of mobility is derived from taxes based on ownership. Moving towards taxing usage (the distance travelled) will encourage the use of appropriate means of transport at appropriate times, making it possible to reduce the cost to society in terms of the environment and congestion2;
In order to gain support for any moves to base the taxation of mobility increasingly on usage, it is vital road users are given guarantees that the associated income for the government will at the very least be used to improve and maintain the road network;
In addition to placing a greater focus on the quality of the road infrastructure, it is also vital to develop co-modal transport solutions. These are necessary in order to compensate and offer alternatives to those who are unable or unwilling to pay to use the road infrastructure.
FEBIAC is proposing six measures, known as the Mobility Six Pack, which are in keeping with the aforementioned tax shifts but are also in keeping with its vision for making mobility more efficient, environmentally friendly and affordable for all. Importantly, these measures are inextricably linked to each other and will only have a positive impact on mobility if they are introduced in full.
“The proposed measures support our vision of improving mobility through smart taxation,” said Frank Dierckx, Partner Tax & Legal Services at PwC. “Each of the measures interacts with at least one of the proposed shifts in mobility taxation. According to our calculations, the introduction of the measures could potentially lead to a fall of 12% or more in the cost to society of mobility. This translates into a 6.6% fall in the congestion cost and a 5.4% fall in the environmental cost. The new patterns of government income and spending associated with these measures cancel each other out, making this a budget-neutral solution for the government.”
For Luc Bontemps, CEO of FEBIAC, the measures should first and foremost form the basis for a fair deal between the government and users. “There is nothing wrong with asking users to contribute towards the costs of improving mobility. But it is important that the any distance-based levy charged to users replaces existing taxes, such as the initial vehicle registration tax and the annual road tax.”
For him, it is equally important that users are provided with transparent information on the use of funds and the results. “Those who travel less, and do so in a more fuel efficient and environmentally friendly manner during off-peak hours, will pay less. However, the tax on usage must be used to benefit users, by using revenues to upgrade the road infrastructure and fund satisfactory, environmentally-friendly alternatives, as this is the only way to create support for the introduction of road pricing. At the very least, we hope that our proposals will make a constructive contribution to the debate on mobility.”
Note to editors
1) The detailed calculations and figures regarding the impact of the various measures can be found in the report “Smart taxation for improved mobility” which can be downloaded here: www.febiac.be/slimmefiscaliteit
FEBIAC is the official representative in Belgium of the manufacturers and importers of cars, motorcycles, vans, trucks and buses. Together these companies represent over 200 brands, and they manage and organise the sales and distribution channels via which roughly 650,000 vehicles are put onto the Belgian market every year. In addition the federation brings together many companies that supply and provide services to the automotive sector.