economic instruments

Seite 1
Economic Instruments
Manfred Breithaupt (GIZ)

Seite 2
Why financing is important?
Photos by Manfred Breithaupt, Santhosh Kodulka, Carlos F. Pardo, Santhosh Kodukula, Ko Sakamoto,
Soul Development Institut
Photo by Manfred Breithaupt, Transmilenio
Sustainable Urban Transport
Gap between
local needs
and the
available
financial
resources
•Car-orientated investment
•Poor provisions for pedestrians
and cyclists
•Lack of resources for high
quality public transport system

Seite 3
Major Actors
Financing of urban
transport
The image part with
relationship ID rId3 was not
found in the ﬁle.
Citizens
Donors and International
Organisations
City administration
National and regional
governments
Private
sector
Photo by Christopher Kost
Photo by Georg Döhn
Photo by Carlos F. Pardo

Seite 4
EconomicInstruments (incl.vehicleand fueltaxation)can be integral
part of TravelDemandManagement…..
• recognizing that travel demand is not given, but is a function of
transportation policies, pricing,investments, choices
• is vital to create high performance, cost-effective transportation systems
• is the natural complement to transportation supply management, land use
planning,and environmental/natural resource management.
They aim at
- creating more revenues to set up a
sustainable urban transport system
- Reduce car usage in city centers and
shift demand to SUT modes

Seite 6
Fuel Taxes and Surcharges
National Instruments
Charges on fuels levied by governments,
sometimes additional fuel surcharges by
provinces of cities
Characteristics:
• Simple, cost-efficient and reliable way of
charging
• Most appropriate way to focus on the
user-pay-principle
• Political acceptability sometimes
problematic, political pressure sometimes
keep fuel prices low
Photo by Varano
Case Study: Fuel surcharge in Colombia
•In all Colombian cities a 20% surcharge to all gasoline sales is levied
•Half of revenues are used for Bogotá’s TransMilenio System
•Private vehicle owners finance one third of a mass transport system
•72% of passengers belong to low income citizens
“On a global level between 80 to 90% of
all revenues derived from the transport
sector are being raised from fuel taxes”

Seite 7
Example: Colombia URBAN fuel surcharge
• Colombian cities have a 20%
surcharge on gasoline sales
• Half of Bogotá’s surcharge revenues
are for Bogotá’s TransMilenioSystem
• Private vehicle owners finance one
third of mass transport system
Photos by TransMilenio and Varano
Some Fuel Taxes and Surchargesare Local!

Seite 8
International Fuel Prices
§ January 2011:Failed
attempt to raise price in
Bolivia
§ January 2012:Semi-
successful price
increase in Nigeria (from
65 Naira to 141 Naira,
back to 97 Naira after
two weeks of protest)
§ March 2012:Two price
adjustemnts in PRC:
Gasoline prices have
smashed the 8 yuan per
litre ($1.27) benchmark
§ April 2012: Failed
attempt to raise prices
in Indonesia with
significantunrest
§ May 2012:German
government
commences price
monitoring
§ Spring 2012:Fuel prices
are major US election
campaign issue
§ Since 1991 GIZ carries out regular worldwide
surveys on fuel prices. One of its goals is to
provide a worldwide comparison of retail prices to
track energy price policies in developing countries.
§ Currently, data are available for 170 countries for
Diesel and Gasoline based on survey in Mid-
November 2012
§ Data are part of World Bank Indicator Set (World
Development Indicators, World Road Statistics, …)
§ Results of 2012 Survey available on:
www.giz.de/fuelprices
§ Fuel prices remain a political issue with high
potential for discontent (see column)
Our work

Seite 9
October 2014
Armin Wagner, armin.wagner@giz.de

Seite 10

Seite 12
§ Fuel price policies are built on four
dimensions: price levels,
regulation, transparency and
enforcement.
§ The following charts provide a brief
overview of these dimensions.
Four Dimensions of
Fuel Pricing

Seite 13
Lowest EU-27 level
Crude oil price ("Brent“)
US retail price level
High
fuel taxation
Fuel taxation
Fuel subsidies
High
fuel subsidies
Fuel Taxation Category 1: High Fuel Subsidies
The retail price of fuel is below the price for crude oil on world market.
Fuel Taxation Category 2: Fuel Subsidies
The retail price of fuel is above the price for crude oil on world market and below the price level of the United States.
Note: The fuel prices of the United States are average cost-covering retail prices incl. industry margin, VAT and incl. approx.
US 10 cents for the 2 road funds (federal and state). This fuel price may be considered as the international minimum
benchmark for a non-subsidised road transport policy.
Fuel Taxation Category 3: Fuel Taxation
The retail price of fuel is above the price level of the United States and below the price level of Romania (Luxembourg).
Note: In November 2010, fuel prices in Romania (Luxembourg) were the lowest in EU-27. Prices in EU countries are subject
to VAT, fuel taxes as well as other country-specific duties and taxes.
Fuel Taxation Category 4: High Fuel Taxation
The retail price of fuel is above the price level of Romania (Luxembourg).
4 country categories to benchmark
transport and energy policies:
1: Fuel Price Level - Categorisation

Seite 14
Principle 1: Cover Production / Transport / Refinery Costs
Fuel prices cover the full costs of production/import, transport and refining
including depreciation and external costs of production (e.g. environmental
costs)
Principle 2: Fuel taxes help finance the transport sector
Fuel taxes contribute to sustainable development of the transport sector
Road maintenance financing (rule of thumb: minimum of US 10 cents for road
maintenance, including 20 % for rural roads)
Principle 3: Internalise external effects of transport sector
Directly related to fuel consumption and CO2 emissions.
Proxy for other social costs (like accidents (cf. road safety cent, congestion,
etc.). Eco-Tax.
Principle 4: Fuel taxes contribute to general state budget
Major contribution towards financing core state functions such as the health
services, education and security.
As fuel taxes are easy to collect, they are a major source of revenue in many
countries. Subject to full VAT as any other good.
05.10.15
1: Fuel Price Level - Principles

Seite 15
Description Examples
Ad hoc price
regulation
Ad-hoc price
changes over long
intervals or
constant prices
over several years
Saudi Arabia,
Bolivia,Qatar,
Nigeria,Indonesia
Active price
regulation
Prices are
regulated and
reviewed based on
pre-determined
criteria and / or
formulae and often
at regular intervals
(weekly,monthly)
South Africa, PR
China,
Vietnam
Passive or
no price
regulation
Regulation is
limited to the level
of taxes and frame
conditions (e.g.
fuel qualities)
Germany, USA
Time
Price
Time
Price
Time
Price
2: Price Regulation - Categories

Seite 16
0
2
4
6
8
10
12
0
20
40
60
80
100
120
140
160
Jan
08
Mar May JulySep Nov Jan
09
Mar May JulySep Nov Jan
10
Mar May JulySep Nov
USD/Rand
USCents/litre
Gasoline Diesel Brent Crude Exchange Rate (USD/Rand)
The “Energy Department of South Africa” is a
governmental institution in charge of regulating fuel
prices. The “National Petroleum, Gas and Oil
Corporation of South Africa” (PetroSA) is the national oil
company, operating refineries and oil rigs.
Fuel prices are calculated based on elaborated formulas
and methods.
The Basic Fuel Price (BFP) is the refinery price for one
litre of fuel, including the price for crude oil and any
import, handling and (sea-)transportation costs.
Inland transportation costs, wholesale margins and
distribution costs are calculated taking into account the
approximate, actual costs and also some limited
commercial profit (between 10% and 20% on the
depreciated book value of assets per year, calculated for
a fictive, average company; if the actual value exceeds
this interval, margins are recalculated).
Pump prices for petrol and wholesale prices for diesel
are regulated – i.e. the retail margins for diesel are
liberal.
Slate Levy / Slate Account: Since the BFP changes daily
(because of the crude oil price and the US$ exchange rate),
but fuel prices are regulated only monthly, differences
arise. I.e. customers pay too much on some days or too
less on other days each month. This price differences
are multiplied by the approximate amount of fuel sold at
that specific day and summed up over one month.
This sum is then cleared with a consistent “Slate
Account”. A Slate Levy is only imposed for the next
month, if this Slate Account balance drops below zero
(as of September 2010, the Slate Account balances are almost
+900 Mio. Rand for Petrol and ~ +310 Mio Rand for Diesel).
Several levies are imposed, including a levy for the Road
Accident Fund (RAF) of 0.72 Rand/litre (as of Nov.2010).
Fuel Price Regulation: Example South Africa

Seite 17
Principle 1: Reflect changes in cost of production,
transport and refinery
Fuel prices adjustments reflect changes in cost of
production/import, transport and refinery,
including depreciation and external costs of production
(e.g. environmental costs)
Principle 2: Allow for inflationary adjustment
Fuel pricing scheme allows for adjustment to
inflationary (and increase in income)
Principle 3: Limit budgetary consequences
Fuel price adjustments limit budgetary impact and
indicate clear exit strategies (in case of subsidies)
05.10.15
2: Price Regulation - Principles

Seite 18
0
0,2
0,4
0,6
0,8
1
1,2
1,4
Crude+
refinery+
margins
?
How transparent are composition and regulation
of fuel prices?
3: Transparency – 3 Examples
0,80
0,03
0,16
0,20
0,00
0,20
0,40
0,60
0,80
1,00
1,20
1,40
VAT
Specific Excise
Duty
Dealer
Commission
Price Charged to
Dealers
0,62
0,11
0,08
0,11
0,00
0,20
0,40
0,60
0,80
1,00
1,20
1,40
Taxes
Distribution and
Marketing
Refining
Crude Oil
Delhi effective 16-04-14
(USD / litre)
Source India: https://iocl.com/Products/PriceBuildup/Price_buildup_of_MS.pdf
Source USA: http://www.eia.gov/petroleum/gasdiesel/
U.S. Regular Gasoline
(USD/litre) April 2014
Saudi Arabia

Seite 19
Principle 1: Institutional stakeholders in price setting are known
Provide information on institutional stakeholders involved in
determination of price levels and elaboration of price adjustments
Principle 2: Principles of price setting are known
Provide information on determinants for pricing, on frequency of updates
and the underlying formula if automatic mechanisms are applied.
Principle 3: Information on price composition is available
Publish information on taxation levels and composition of fuel prices
Principle 4: Information on prices and price setting are made
public in an easy-to-access, comprehensible and accountable
manner
Information is displayed on the Web including:
Current price data for all fuel products; timelines of prices; price components (production and/or
import prices, taxation levels, and other charges); description of structure and modus operandi
of pricing mechanisms (if applied); underlying legislation.
05.10.15
3: Transparency - Principles

Seite 20
Issues:
§Enforcement of regulated prices or transparency regulations
§Prevention of black markets and smuggling
§Prevention of adulteration (e.g. kerosene and diesel)
05.10.15
4: Enforcement

Seite 21
0
200
400
600
800
1000
1200
Nov 07 Dec 07 Jan 08 Feb 08 Mar 08 Apr 08 May 08 Jun 08 Jul 08 Aug 08 Sep 08 Oct 08
RSA-cents/litre
0
50
100
150
200
250
300
350
400
450
01.10.2007
01.11.2007
01.12.2007
01.01.2008
01.02.2008
01.03.2008
01.04.2008
01.05.2008
01.06.2008
01.07.2008
01.08.2008
01.09.2008
01.10.2008
01.11.2008
US-cents/gallon
0
100
200
300
400
500
600
700
800
900
Nov
07
Dez
07
Jan
08
Feb
08
M
rz
08
Apr08
M
ai08
Jun
08
Jul08
Aug
08
Sep
08
O
kt08
Nov
08
CFAFranc/Liter
Transparency / Targeting
Monitoring /
Information
Objective: Move towards
rational pricing, increase
transparency and improve
targeting of subsidies
Objective: Increase
transparency, build
trust through
accountability and
de-politize fuel
pricing
Objective: Increase
transparency through
government-sponsored
monitoring and other
information initatives
Reform Approach in Four Dimensions
Ad hoc regulation Active regulation Passive or no regulation
Very high
fuel taxation
Fuel taxation
Fuel subsidies
Very high
fuel subsidies

Seite 22
0
200
400
600
800
1000
1200
Nov 07 Dec 07 Jan 08 Feb 08 Mar 08 Apr 08 May 08 Jun 08 Jul 08 Aug 08 Sep 08 Oct 08
RSA-cents/litre
0
50
100
150
200
250
300
350
400
450
01.10.2007
01.11.2007
01.12.2007
01.01.2008
01.02.2008
01.03.2008
01.04.2008
01.05.2008
01.06.2008
01.07.2008
01.08.2008
01.09.2008
01.10.2008
01.11.2008
US-cents/gallon
0
100
200
300
400
500
600
700
800
900
Nov
07
Dez
07
Jan
08
Feb
08
M
rz
08
Apr08
M
ai08
Jun
08
Jul08
Aug
08
Sep
08
O
kt08
Nov
08
CFAFranc/Liter
X – Price increase without reform of
regulation and limited transparency
(big bang theory)
√ – 2nd step: Reform of
regulation (move towards
formulae based pricing
mechanism with regular price
review)
√ – 3rd step: Gradual
price increases (e.g. with
indexation)
√ – 1st step:
Increase
transparency (of
composition of
prices and of
regulatory approach)
Ad hoc regulation Active regulation Passive or no regulation
Transparency
Very high
fuel taxation
Fuel taxation
Fuel subsidies
Very high
fuel subsidies
Reform Approach in Four Dimensions: Example

Seite 23
Fuel Prices, Fuel Quality and Energy Efficiency in the Transport Sector
...Urban Sprawl with high travel distances ...Excessive car use ...Inefficient vehicles
Low or even
subsidized fuel
prices
encourage...
Low or even
subsidized fuel
prices
encourage...
...under-recovering of refineries with fuel shortages ...Low quality fuels ...Lack of innovationin car
industry
Vicious momentum of low fuel prices in the
transport sector

Seite 24
...Dense and transit oriented development ...Walking and use of
busses, trams, bicycles
...Efficient operation of traffic
High fuel
prices
encourage...
High fuel
prices
encourage...
...Investment in high quality fuels ...Innovationin car industry
Positive momentum of high fuel prices in the
transport sector
Fuel Prices, Fuel Quality and Energy Efficiency in the Transport Sector

Seite 25
Open issues: Diesel
0
0,2
0,4
0,6
0,8
1
1,2
1,4
1,6
1,8
2
Egypt
Ecuador
Brunei
Bangladesh
Jordan
Sudan
Cuba
SriLanka
Brazil
Singapore
Grenada
IvoryCoast
Japan
Madagascar
Mauritius
Lebanon
Peru
Kuwait
Macedonia
LaoPDR
BurkinaFaso
Korea,South
Malta
Fiji
Kenya
Zimbabwe
Ukraine
Lithuania
China,P.R.
Finland
Mongolia
Italy
Montenegro
CzechRepublic
Guyana
Latvia
CentralAfricanRepublic
Maldives
Poland
Congo,DemocraticRep.Of
Indonesia
Qatar
Spain
Zambia
RussianFederation
Botswana
Georgia
SouthAfrica
Iceland
UnitedKingdom
Israel
Liechtenstein
UnitedStates
UnitedArabEmirates
Diesel / gasoline price ratio
Diesel more expensive than gasoline
Diesel less expensive than gasoline

Seite 26
Fuel price levels should “tell the economic and ecological truth”
Regulation of fuel prices need to reflect a number of principles
Transparency in fuel price regulation fosters public participation and
broader political support
Increase attention to diesel/kerosene pricing; pricing of nat. gas
Good practice: Fuel taxation based on carbon content (avoid
subsidization of diesel fuel)
Good practice: Adopt a stepwise (yearly) increase in fuel taxation in just
one legislative act (avoiding a permanent political discussion)
Good practice: road tolls for freight transport (avoiding and
compensating for fuel tourism)
05.10.15
Reform of transport fuel taxes - Conclusions

Seite 27
Our Resources
GIZ Fuel Price News:
§ Monthly collection of global fuel price news
§ Recommended reading on related publications
Report “International Fuel Prices”:
§ Overview and data on retail prices of gasoline
and diesel in more than 170 countries
§ Detailed information on price levels, pricing
dimension, subsidies, taxation, regulation and
transparency
§ Published every two years, last in 10-2014
Factsheets:
§ Offer compact information on two pages:
§ Price in USD and local currency (some since 1991)
§ Price composition
§ Pricing policy
§ Transparency-traffic-signalon price composition and
pricing policy
Website: www.giz.de/fuelprices
Report International Fuel Prices
Monthly newsletter

Seite 28
Our "International Fuel Prices
Observatory” factsheets offer
compact information on two pages:
•Price in USD and local currency
(some since 1991)
•Price composition (production costs,
taxes, fees, margins, etc)
•Pricing policy
•Transparency-traffic-signal on price
composition and pricing policy
•Related Links
Page 1

Seite 29
Our "International Fuel Prices
Observatory” factsheets offer
compact information on two pages:
•Price in USD and local currency
(some since 1991)
•Price composition (production costs,
taxes, fees, margins, etc)
•Pricing policy
•Transparency-traffic-signal on price
composition and pricing policy
•Related Links

Seite 30
Tax or charge on car purchase and/or ownership
Characteristics:
• Taxes are very flexible, can be
varied depending on engine size,
carbon emissions, environmental
standards, weight or number of
axles
• Taxes are able to reflect
externalities
. Generally surprisinglyhigh political
acceptability (up to a point)
. Usually set nationally; not for sake
of local context
Photo by Karl Fjellstrom
National Instruments

Seite 31
19 member states levy CO2-related taxation on cars.
Source: www.acea.be
EU countries
• At least 20 of the EU‘s 28 member
states apply CO2 – based car
taxation
• At least 18 countries also offer
incentives (cash & tax exemption) for
buying electric vehicles
Vehicle-Related Taxes and Charges

Seite 32
Case Study: Environmentally-orientated taxation system
for new cars in France
Since January 1, 2008, a car owner who buys a new car emitting more
than 160 grams of carbon dioxide per kilometer will be charged a one-
off penalty of up to €8 000 ($9950).
Photo by Manfred Breithaupt
Photo by http://www.knmaltitude.com/
Flight%20Attendant%20Training.html

Seite 33
• Buyers of more
environmentally-friendly
cars receive a bonus
ranging from €150 ($187)
to €6,300 ($7,840),
depending on emission
levels
• Extra cash award for
scrapping a polluting old
vehicle at the same time
• For the cleanest of all –
those emitting less than
20 grams of carbon
dioxide, currently mainly
electric cars -- the state
will pay out a special
super-bonus of €6,300.
Bonus system for new cars (New car taxation in France)
Photo by Hickmann

Seite 34
Comments ( Car taxation in France)
• Emission limits used to be toughened every two years from 2008, by five
grams each time, to encourage manufacturers to keep developing cleaner
cars.
• A company car tax is based on the respective CO2 emissions of each
vehicle. Tax rates vary from €2 for each gram emitted between 50 and
100 g/km to €27 for each gram emitted above 250g/km
• The average carbon dioxide emissions for new vehicles sold in France
declined by 32 grams per
kilometer between the end of
2007 and the end of 2013.
• Emissions from vehicles
purchased in France are now
9.4 grams under the European
average, putting France a top
European ranking. time.
Vehicle Related Taxes and Charges
Photo by Hickmann

Seite 35
Overview ( Car taxation in France)
Eco Penalty
CO² Emission Rate
(Grams/Km)
Tax Amount
From November 1st 2013
131 - 135 g CO2/km 150 €
136 - 140 g CO2/km 250 €
141 - 145 g CO2/km 500 €
146 - 150 g CO2/km 900 €
151 - 155 g CO2/km 1 600 €
156 - 175 g CO2/km 2 200 €
176 - 180 g CO2/km 3 000 €
181 - 185 g CO2/km 3 600 €
186 - 190 g CO2/km 4 000 €
191 - 200 g CO2/km 6 500 €
201 g CO2/km 8 000
Eco Bonus
CO² Emission Rate
(Grams/Km)
Amount
From November 1st 2013
0 – 20 g 6300 € (max. 27% of purchase price)
21 – 60 g 4000 € (max. 20% of purchase price)
61 – 90 g 150 €
Source: http://www.french-property.com/ news/mo ney_f rance /car_ emission _tax_b onus/

Seite 36
Overview (car taxation in France)
VED CO2 2013/14 2013/14 2014/15 2014/15 2014/15
band Emissions first year standard first year standard standard
(g/km) rate rate rate rate £ rate €
A up to 100 0 0 0 0
B 101-110 0 £20 0 £20 25,34 €
C 111-120 0 £30 0 £30 38,00 €
D 121-130 0 £105 0 £110 139,35 €
E 131-140 £125 £125 £130 £130 164,68 €
F 141-150 £140 £140 £145 £145 183,69 €
G 151-165 £175 £175 £180 £180 228,02 €
H 166-175 £285 £200 £290 £205 259,69 €
I 176-185 £335 £220 £345 £225 285,03 €
J 186-200 £475 £260 £485 £265 335,70 €
K 201-225 £620 £280 £635 £285 361,04 €
L 226-255 £840 £475 £860 £485 614,40 €
M over 255 £1065 £490 £1090 £500 633,40 €

Seite 37
Case Study: Motor Vehicle Taxation
United Kingdom

Seite 38
CO2 based taxation in UK since 2001
• Cars registered in UK after March 2001 are taxed based on CO2 emissions
• Taxation according to tax band system
Ø CO2 emissions are used to determine the road tax bands
• The first year rate or 'showroom tax' applies to new car purchases only. Rate
reverts to 'standard rate' in subsequent year
• Official CO2 emissions levels are measured when the model is tested for 'type
approval‘
• Cars registered before March 2001: Measure according to engine size of the
vehicle

Seite 39
Case Study: Motor Vehicle Taxation-
The Netherlands

Seite 40
Dutch vehicle taxes
Ø Lowest national average CO2 rating of new cars sold in
2013
Ø At 109.1 g/km, it was also the first and only country to
achieve a national average below 110 g/km
• Substantial initial registration taxes, heavily graduated to
discourage the purchase of cars with high CO2 emissions
• Company car taxes are also graduated according to CO2
emissions

Seite 41
Dutch vehicle taxes
• One of the lowest shares of diesel vehicles among its new cars
• By far the highest percentage of electric vehicles (mainly plug-in hybrids) among new car purchases at
5.3% of all sales
• Market for fuel-efficient cars is also influenced by the very high rates of tax and duty on road fuels
• For petrol, Dutch tax rate is highest found in the EU, with more than €1 of tax on every litre
sold
• Tax on diesel is lower, but still among the highest levels found in Europe
Source: http://www.transportenvironment.org/sites/te/files/Netherlands_FINAL.pdf

Seite 42
Current regulations regarding Dutch
vehicle taxes
• 2015 Tax Plan for BPN (luxury tax), MRB (road tax) and company car tax,
implemented as of January 1st
• New BPM tax tariff scale for vehicles with a CO2-emission
• Only vehicles with a nil emission can get an exemption from BPM
• For all other vehicles comes a BPM starting rate of € 175,-
• Limits of current four tariff scales are tightened
• Electric vehicles with a zero CO2-emission will have an exemption for BPM until 2018
• For diesel vehicles with an emission of <70 g/km, the diesel surcharge will be raised from
€72,93 to €86,00 per g/km
• The exemption of road usage tax for vehicles with a lower emission (until 50 g/km) will
expire as of January 1st, 2016

Seite 43
Current regulations regarding Dutch
vehicle registration taxes
The CO2 emission is
higher than
but not more than then deduct the value from column I from the CO2
emission of the car
multiply that sum by the amount in column IV
add to that sum the amount from column III
I II III IV
0 grams/km 82 € 175 € 6
82 grams/km 110 € 667 € 69
110 grams/km 160 € 2,599 € 112
160 grams/km 180 € 8,199 € 217
180 grams/km - € 12,539 € 434
Step 2: Diesel surcharge
€86 per gram CO2 emission above the 70 gr/km
Example: Otto 100gr/km: 100-82=18 x69+667=1909 Euro
Diesel 100gr/km: 100-82=18 x69+667+(30x86)=4489 Euro
Step 1- Otto:

Seite 44
Proposed changes regarding Dutch
vehicle taxes
• 2016 “Alternative Company” Car Tax Plan, proposed to be implemented as of
January 1st
• Electric vehicles with a zero CO2-emission will remain to have an exemption for BPM
• PHEV’s and REV’s will be charged for a half-tariff
• The 4% and 7% tax charge category will disappear. Vehicles with an emission of 1 to 50
g/km will be qualified for the 15% category
• Vehicles with an emission of 51 to 106 g/km will be qualified for the 21% category
• The 25% category will apply for vehicles with an emission of 107 g/km or higher
• These changes will not affect ongoing contracts entered into before January 1, 2016

Seite 45
Case Study: Motor Vehicle Taxation
Germany

Seite 46
Targets (Vehicle tax Germany)
• Lower emissions of local pollutants –
now Euro 6 (from 09/2014)
• Lower CO2 emissions
• Market drives car manufacturers to
offer “green“ cars
• Promotes further Research and
Development
• Incentives for consumers to purchase
“green” cars
Figure by: GTZ Module 5a Air
Quality Management
Photo by: GTZ Module 4a
Cleaner Fuels and Vehicle
Technologies

Seite 47
Changes (Vehicle tax Germany)
Old Tax
• based on:
• Engine displacement
• Tax deduction for
particularly ecological
cars
§ New Tax
§ based on:
» Engine displacement
» CO2-emissions
» Tax deduction for
particularly ecological cars
Engine displacement + (CO2-emission - exempt amounts)
Petrol Engine 2€/100cm³ + ( 2€ per g/km - green/blue box)
Diesel Engine 9,50€/100cm³ + ( 2€ per g/km - green/blue box)
CO2 exempt amount (Diesel/Petrol):
• Until 2011: 120 g/km
• Until 2013; 110 g/km
• From 2014: 95 g/km
The New Tax in Detail
CO2 exempt amount for Diesel Engine
cars with Euro 6 Norm:
• 150 € per year until 2013
Vehicle RelatedTaxes and Charges

Seite 48
Examples (Vehicle tax Germany)
BMW 118 Diesel
• Engine Displacement: 1995 cm³
• Power: 105 kW
• Fuel: Diesel
• Consumption: 4,5 l
• CO2-emission: 119 g/km
• Euro5
2009: 308 €
2010: 190 €
2014: 238 €
Porsche Cayenne S
§ Engine Displacement: 4806
cm³
§ Power: 283 kW
§ Fuel SuperPlus
§ Consumption: 14,9 l
§ CO2-emission: 358 g/km
§ Euro4
2009: 324 €
2010: 574 €
2014: 624 €
Toyota Yaris 1.0
§ Engine Displacement: 998
cm³
§ Power: 51 kW
§ Fuel: Super
§ Consumption: 5,0 l
§ CO2-emission: 118 g/km
§ Euro4
2009: 67 €
2010: 20 €
2014: 66 €
Vehicle Related TaxesandCharges

Seite 49
Examples vehicle tax comparison
VW Golf VI 1,2 TSI
• Engine Displacement: 1197 cm³
• Power: 63 kW
• Fuel: normal petrol
• Consumption: 5,5 l
• CO2-emission:119 g/km
• Euro5
Vehicle Related TaxesandCharges
Germany
72 € Euro
UK
38 € Euro
France
150 € Euro

Seite 50
• An emission zone:
– is an area from which highly polluting motor vehicles are banned
– these will be excluded from the city centre in three stages
– to enter the Zone, vehicles must displaya permit disc (‘Vignette’)
• As of January 2008: Berlin, Hannover,Cologne, meanwhile all major
cities in Germany followed
http://www.zeit.de/online/2009/22/auto-avus-1989
http://www.flickr.com/photos/vitaminf/3558748791
/
Case Study: Particulate matter emission - Emission
zones in Germany
VehicleRelatedTaxesand Charges

Seite 51
Emission Zone: Berlin
Stage 1 from 1.1.2008:
Vehicles (lorries and
passenger cars) must at least
meet the requirements of
Pollutant Class 2 of the
recently adopted national
vehicle marking scheme
Therefore, vehicles with red,
yellow and green stickers are
allowed.
Stage 2 from 1.1.2010:
Only vehicles in Pollutant
Class 4—thus, only vehicles
with green stickers—may
circulate within the zone.
2.2 Vehicle Related Taxes and Charges (9)

Seite 52
Parking Charges –sep
Presentation
Characteristics:
• Strength in efficiency and equity
• Steady revenue stream
• Fostering of public transport use
Parking fee for using public road
space
Photo by Carlos F. Pardo – Mexico-City 2007 Photo by Limanond – Singapore 2008
Local Instruments

Seite 53
8,7
6,3
6,0
4,8
4,8
3,8
3,8
3,8
3,8
3,7
1,9
1,9
1,7
1,7
1,5
1,5
1,5
1,3
1,3
1,3
1,1
0,9
0,8
0,6
0,6
2,9
2,0
1,5
2,4
3,2
2,7
2,5
3,4
2,0
1,5
2,0
1,9
3,2
0,8
1,3
2,2
0,7
1,3
1,0
1,3
0,6
0,9
1,3
0,9
0,7
0,4
1,8
1,7
0,6
0
1
2
3
4
5
6
7
8
9
10
London
Amsterdam
Tallinn
Stockholm
Kopenhagen
Berlin
Helsinki
Oslo
Paris
Dublin
Brussels
Luxembourg
Bern
Prague
Rome
Vienna
Riga
Budapest
Athens
Ljubljana
Vilnius
Bratislava
Madrid
Sofia
Warsaw
Bucharest
Lisbon
Vaduz
Valletta
USDollars
On-street parking/hour (CBD)
Single bus ticket
Parking Charges
Comparison of parking fees in European cities (On-street per hour, CBD)
with costs of single bus fare (Survey by GTZ, 2008,www.sutp.org)

Seite 54
Case Study – “license plate auction” in
Shanghai, In Guanzhou, Singapore and…..
Shanghai applies a bidding
system for new car license
plates
Only a given number of vehicles
can be registered per month
Can be 4000--8000 Euro per
new registration
(In Beijing a max of 10000 new
vehicles are allowed to be
registered per month as of
2014)
Photo by Rau
Vehicle quotas
Local Instruments

Seite 55
Revisedcar license plate issuing system in
Shanghai
-- Established first in Shanghai nearly 20 years ago,
-- In Oct’2013, the authority released 10,000 plates for auction, 1,000 more than
it did last month.
-- After the price ceiling was abolished in October’13, the suppressed demand
pushed the average cost of a plate to about 83,700 Yuan during October’13
auction, a surge of around 10,200 Yuan from September.
-- In April’2013, the cost of buying a license plate reached a record price of more
than 90,000 Yuan - three times as much as a cheap car – for example, a Zotye
Z100 which comes in at RMB 24,000.
-- However, the costs of Shanghai's car license plates continued to fall in the past
six months.
http://usa.chinadaily.com.cn/china/2013-10/21/content_17046774.htm

Seite 56
Vehicle License Quota/ Auctioning
• In Shanghai since
1998:
• Limits the number
of new vehicles:
aprox. 8000 per
month
• Auction system,
current price around
$ 10,000 US
• City Income $ 800
million US per year
Chinese License Plates Net, 2009 Chinese License Plates Net, 2009. Statistics of license plate auction in Shanghai.
http://www.paizhao.com.cn/html/paizhaoxinwen/2009/0712/262.html

Seite 57
Vehicle quotasin Singapore
The Singapore Vehicle Quota System
(VQS)
• Each car registered requires a
Certificate of Entitlement (valid 10
years, extendable), with the COE price
determined by auction
• Availablequota for new vehicles
depends on the targeted growth rate in
vehicle population
• Growth rate target was 3% (prior to
2009), 1% (from 2012) and finally
0.5% in Feb 2013)
Photos by Manfred Breithaupt and Carlos F. Pardo
Local Instruments

Seite 58
Singapore
09 November
09.25 am

Seite 59
Shanghai
09 November, 9.20
am

Seite 60
Insert congestion slide 8.00 am
Beijing
9 November, 09.15
am

Seite 61
From To Years
1949-1997 2300 1 Mil. 48
1997-2003 1 Mil. 2 Mil. 6
2003-2007 2 Mil. 3 Mil. 4
2007-2009 3 Mil. 4 Mil. 2.5
2010 4 Mil 4.8 Mil 1
Vehicle ownership Beijing
• 800,000 new cars were
registered in 2010
• That is 2191 new cars each day
in 2010!

Seite 63
Singapore - Certificates of Entitlement
The Open Bidding System for Certificates of Entitlement (COE)
allows to submit a bid for a COE, to monitor the current COE Price and
to reserve the price of a bid from home, office or even from mobile
phone. It provides real-time information during the bidding exercise so
that one can check the current COE price and use it as a reference
when submitting or revising a bid.
One can submit his bid by indicating the maximum amount that he is
willing to pay.
If the bid has been successfully submitted, the
bank will deduct the bid deposit, together with an administration fee of
$2 from bank account.
The COE Open Bidding System
To find the user guide of the Open Bidding System you may visit:
http://www.lta.gov.sg/ocoe/index.html

Seite 64
Bidding Results,Quota Premium and
Prevailing Quota Premium in Singapore
http://www.lta.gov.sg/content/dam/ltaweb/corp/PublicationsResearch/files/FactsandFigures/COE_Result_2010_2013.pdf

Seite 65
BMW 325I Convertible
S$ Euro
OMV 63061 33506
Duty 12612 6701
GST 5297 2814
ARF 63061 33506
COE 13389 7114
Total 157420 83614
Singapore – Cost of Vehicle Purchase
Source: http://www.lta.gov.sg/motoring_matte rs/m otorin g_vo_ tax_pt e.ht m
Photo: http://autoreview.belproject.com/ite m/305
Open Market Value (OMV)
§ OMV is assessed by the Customs & Excise
Department, taking into account the purchase price,
freight, insurance, handling and all other charges
incidental to the sale and delivery of the car from
country of manufacture to Singapore.
Registration fees
§ Registration Fee (RF) $140
§ Additional Registration Fee (ARF):
130% of OMV1 or 110% of OMV2 or 100% of OMV3
§ Certificate of Entitlement (COE) Bid
§ Customs Duty 20% of OMV
§ Goods & Services Tax: 5% based on the CIF value
(cost, insurance & freight)
1 For cars registered with COEs obtained from March 2002 to February 2004tender
exercise.
2 For cars registered with COEs obtained from March 2004 to February 2008tender
exercise.
3 For cars registered with COEs obtained from March 2008 tender exercise and onwards.

Seite 66
Same vehicle - huge price differences
Honda Civic Sedan VTi-S AT (1,8L AT)
$
$$
$$$
$$$$
$$$$$
$$$$$$
$$$$$$$
USA: US$15,010 suggested starting price =S$ 21,300
Australia: AUD$23,790 =S$ 30,645
Thailand: THB768,000 =S$ 34,612
UK: £14,880 =S$ 41,945
Mumbai, India: INR1,218,700 =S$ 43,910
Malaysia: RM113,800 =S$ 49,908
Singapore: S$ 77,800
(including $8,000 COE)
Source: Time Out Magazine Singapore,March 2008

Seite 67
Employer Contributions
Local Instruments
Characteristics:
• Good in sustainable transport, political
acceptability and administrative ease
• Strength in stability
• Best possible use for local needs
Financial Support of local public transport
by employer’s and by businesses
Types:
• Direct tax to local authorities
• Subsidy of the employee’s
public transport fares
Considerations:
• Appropriate legislative framework is
required
Photo by Carlos F. Pardo
Photo by Santhosh K. Kodukula

Seite 68
Case Study: The Congestion Charging in London
Congestion Operating Hours: 7am – 6.30pm Monday to Friday, excluding
Public Holidays and Non-charging days (e.g. Christmas Day and New Year’s
Day)
Where and when does it operate?
Source: http://www.tfl.gov.uk/roadusers/congesti oncha rging/ 6718 .aspx
Road Pricing/Congestion Charging

Seite 69
Congestion charging in London
• £10 a-day is the congestion charge for
those driving in eight square miles of
central London.
• Drivers who paid the charge either by
(cell-) phone (until 10 pm), via the
internet or at shops and garages get
registered in a database.
How does it operate?
• Anyone who fails to pay by midnight on the following charging day is fined £120.
• 331 Camera sites monitor the traffic at both entry and exit points of the zone
Video Camera Signs (Photo from Todd Litman 2004)

Seite 70
Impacts1 (Congestion Charging in London)
Travel
Speed
Bicycle
Use
Bus
Ridership
Traffic
+
20%
(-20,000 veh/day)
37%
(17 km/hr)
-
14%
72%
Congestion
Delay
30%
1 in the monitoring period after implementation

Seite 71
Road
accidents
Bus
Congestion
Delay
+
20-40%-
Taxi
Travel
Cost
50%
16-19%
Air
Pollution
Retail
Activity
4.7%
70 less
per year
Impacts1 (Congestion Charging in London)
1 in the monitoring period after implementation

Seite 72
Public
Transport
Ridership
Peak Hour
Congestion
22%
8%
Traffic
25%
14%
Air
Pollution
Retail
Sales
10%
„Trängselskatt“ - Travel Impacts
(Congestion Charge in Stockholm)

Seite 73
Early Singapore
• Severe Traffic Congestion
• Rising travel demand
• Unreliable bus services
Some of the SIA slides have been provided by
Monhinder Singh, Director LTA Academy

Seite 74
65 kph45 kph
Increase
ERP rate
Decrease
ERP rate
Expressways
30 kph20 kph
Increase
ERP rate
Decrease
ERP rate
Arterial Roads
• ERP is a congestion
management tool
• Pay-as-you-use
principle
• Review speed range
at 3-month interval,
adjust ERP rates
Electronic Road Pricing (ERP)

Seite 75
Case Study: Brazilian Vale-Transporte
•In cities employers are required by law to buy and provide public transport
tickets
•Thereby the employers can withhold 6% of salaries to cover these costs
Employer Contributions
• Financial Support of local public transport by employer’s and by businesses
• Stable way of funding
• Best possible use for local needs
• Examples: The Brazilian Vale Transporte, Versement Transport in France
Local Instruments

Seite 76
Case Study: Versement Transport in France
•The French Versement Transport (VT) is a tax
levied on employees’ salaries to pay for
improvements in public transport in the local
area. In return, employees receive subsidies or
free travel on public transport
•Organisations with more than 9 employees in a
district with more than 10,000 inhabitants are
legally required to pay the VT.
•The rate currently ranges from 0.55% to 1.72%
of the total wages of each eligible company
•Revenues have been used to fund small- and
large-scale infrastructure projects across
France
•The VT has played a major part in funding the
upgrading and expansion of the Paris Metro
Public Transport in Ile-de-France
Sources: http://www.stif.info/information-commu nication/ docu ments -langu es-et ran geres /english/ docu ments -anglais -124 1.ht ml
http://www.indigoguide.com/france/pa ris-m etro. htm
Local Instruments

Seite 77
Land Development and Land Value Taxes
Local Instruments
Financing measure where land owners directly benefiting from new public
infrastructure has to pay for
Types:
• Land value tax
• Developer contribution
Characteristics:
• Good contribution to sustainable
transport
• Tax payers are not penalised
• Lack of increasing trade taxes
• Businesses located near the new
infrastructure can increase their
trades and profits
Considerations:
• Create a legal framework that allows land-based taxes
• Ensure communication to minimise perception of unfairness from those being taxed
Photo by TransMilenio

Seite 78
Land Development and Value Taxes
Land Value Tax:
•Land owner is charged in relation to its benefits from new public transport
infrastructure
•Tax is based on the optimum permitted use of land and the current market price
•Promotes better usage of owned land
Case Study:
Land value capturing in “Orestad”
(District of Copenhagen)
•Significantly growth of land value
due to the construction of a new
metro line
•Land was sold to much higher
prices than before
•Revenues covered 45% of metro
construction costs

Seite 79
Land Development and Value Taxes
Municipal
road owner
Private land owner
A. New urban roads: All roads of a new development area including sidewalks, etc. (based on
existing development statute acc. to Federal Building Law)
10 %
of construction costs
90 %
of construction costs
Subsequent maintenance of roads within new development area 100 %
0 %
(Indirect contribution through land tax)
B. Existing urban roads (Contribution Statute according to Provincial Law)
1. Maintenance of all roads
1.1 Winter service of all urban roads 100 % for road lanes 100 % for sidewalks
1.2 Repair to initial standard 100 % 0 %
1.3 New sidewalks and street lighting for existing roads 100 % 0 %
2. Rehabilitation/Upgrading
2.1 National and provincial roads
100 % by federal or
provincial government
0 %
2.2 Urban main traffic roads including lighting and drains 90 %
10 % for traffic lanes (up to 8.50 m width)
50 % for sidewalks and parking lanes
2.3 Main residential development road (artery) incl. lighting and drains 70 %
2.4 Main industrial development roads 70 %
2.5 Main shopping streets 60 %
2.6 Residential roads 50 %
2.7 Traffic calming zones incl. parking and lighting 50 %
2.8 Commercial roads for industry 50 %
2.9 Sidewalks and parking lanes (independent or in combination with
residential roads or shopping lanes)
40 % 60 %
Case Study:
Cost sharing between municipality and land owners
in urban road financing in Germany
Developer contribution:
•Partnership
agreement between
developer /land owner
and state
•When granting
permissions for land,
developers need to
ensure improvements
in the existing
transport
infrastructure
•Enhanced flexibility
due to individual
negotiated
agreements
Table by Federal Building Law (BAUGB)/Communal
concession tax law (KAG) Adapted from Fink, M (2005)

Seite 80
Advertising
Local Instruments
Free space of public transport infrastructure or vehicles is utilised for promotion of
products
Characteristics:
• Strength in stability and political
acceptability
• Can be used to bridge shortfalls in
financing
• Little benefit towards sustainable
transport
Considerations:
• Ensure that safety and visual
obtrusion are not severely impacted
Photo by Geraldine Holland

Seite 81
Advertising
Case Study:
Advertising on bus stops in
London
•Contractual agreement
between “Transport for
London”(TfL) and “Clear
Channel” (CC)
•CC owns the rights to sell
media space on half of TfL’s bus
shelter portfolios
•CC in return runs the routine
maintenance an design of street
furniture
•All generated incomes are
used for the London public
transport network
Photo by Geraldine Holland

Seite 82
Public Private Partnerships (PPP)
Local Instruments
• Utilisation of private sector know-how
• Risks are allocated to the party best able to manage each
particular risk
• Enhanced budgetary predictability
• Failure of delivering projects within budgets – bankruptcy
– passing back of risks (see GTZ module)
3.9 Advertising
• Stable way of funding
• Instrument is highly accepted by
politicians
• Can be used to bridge shortfalls in
financing
• Little benefit towards sustainable
transport

Seite 83
Development of an Urban Transport Fund
Combining the Financing Options
“Urban transport is a complex
system in which various
components must work
together effectively. This calls
for an integrated financing
structure at the urban level.”
“Earmarking
certain
revenues may
help to improve
political
acceptability
and the financial
stability of urban
transport funds.”
Concept of an urban transport fund
Photo by Armin Wagner
Photo by Varano

Seite 84
GTZ SUTP project
sutp@sutp.org
transport@gtz.de
Thank you for your attention

economic instruments

Recommended

Recommended

More Related Content

What's hot

What's hot (7)

Viewers also liked

Viewers also liked (20)

Similar to economic instruments

Similar to economic instruments (20)

More from ICLEI

More from ICLEI (20)

Recently uploaded

Recently uploaded (20)

economic instruments