From fuel taxes to distance-based charges: scenario analysis of car tolls on federal roads and highways in Germany

Taxes on fossil fuels have been an important source of tax revenue in Germany. Increasing shares of electric cars will substantially decrease fossil fuel consumption, hence causing a large gap in tax revenues. Besides other policy options, distance-based charges could be an option to compensate for declining car energy tax revenues and establish a sustained revenue stream, e.g., for infrastructure maintenance and investment. In this contribution, we analyze a potential distance-based charge for cars on federal roads and highways in Germany using two scenarios. One scenario follows the compensation principle, i.e., setting distance-based charges dynamically to compensate for declining energy tax revenues. A second scenario follows the cost coverage principle, i.e., setting distance-based charges according to attributable infrastructure costs on federal roads and highways and external costs of cars. Both scenarios include lower tariffs for BEVs to incentivize a shift in drivetrain technologies and reflect their lower external costs. We compute the impacts on transport, environmental and financial outcomes using a system-dynamics model of the German transport sector. Effects are assessed against a baseline scenario that reflects the national projections for greenhouse gas emissions in Germany without distance-based car road charges. Toll rates of 2.5 euro cents per vehicle-kilometer (vkm) in 2030 and 11.2 euro cents per vkm in 2050 on federal roads and highways would compensate for declining energy tax revenues from cars, leading to revenues of 3.6 to 20.4 billion euros per year - net of toll collection costs and at 2024 price levels. Setting toll rates according to external costs would yield between 14.7 to 17.0 billion euros per year in revenue. Considering energy taxes, electricity tax, carbon pricing, and VAT, the total usage-based charges for BEVs would not exceed current usage-based charges for fossil-fueled cars.