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Road Financing in Lithuania WORKSHOP ON ROAD USER CHARGING SYSTEMS 2007-06-12, Warsaw.

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Presentation on theme: "Road Financing in Lithuania WORKSHOP ON ROAD USER CHARGING SYSTEMS 2007-06-12, Warsaw."— Presentation transcript:

1 Road Financing in Lithuania WORKSHOP ON ROAD USER CHARGING SYSTEMS 2007-06-12, Warsaw

2 Why Guarantee Road Financing? To ensure the stability of road condition (for road users – all business entities, investors, road constructors) To estimate funds for roads (for tax payers, state and municipality budget planners) To develop the road network (for cargo owners, carriers, intermediators, politicians)

3 New Attitude is Required Because Road charge in Lithuania was revoked, which was paid from the turnover of the enterprises and made up approximately half of the Lithuanian Road Maintenance and Development Programme revenues; Due to excise harmonization in EU, the excise on fuel is and will be increased in Lithuania in the future; At present, European Parliament and Commission adopted Directive 2006/38/EB by which Directive 1999/62/EB on road charging, which consolidates the principle user pays in road financing, was supplemented; Practices of EU members vary considerably; however, the proportion of direct payment is increasing in all countries.

4 Legal Regulation of Road Financing on EU Level. Strategic Documents. Lisbon Strategy 2000 and the White Book European Transport Policy 2010: Time for Decisions (2001), stipulate the following two goals for the road infrastructure: To ensure high quality and safe infrastructure for the economic development To limit road transport flows for sustainable development, reducing the need for communication (external costs).

5 Legal Regulation of Road Financing in EU. Directives. 99/62/EC (Euro vignette) defines vehicle registration and infrastructure users taxes and charges. The draft of new Directive submitted by the Commission and adopted by Parliament in 2006. Principles: To specify road charges according to use To harmonize taxes To earmark funds for roads 92/82/EEB and 2003/96/EB regulate minimal excises on fuel. Principles: To harmonize taxes To limit traffic by charging external impact To define the expedience of funds

6 Two essential alternatives of road financing Road infrastructure, as a public facility, is financed from general taxes; Road infrastructure, as a service for companies and citizens, is financed from special taxes paid by the users of infrastructure

7 Financing from General Taxes Advantages – relatively simple management of funds based on the possibility to communicate, more accepted in the countries with high level of automobilization. Disadvantages – supply (infrastructure) is separated from demand (transport flows) because users do not pay for using the infrastructure. Hence: abnormal exploitation of infrastructure, which constantly increases infrastructural upkeep costs (including external impact on the environment) and generates the need for new infrastructure, inefficient distribution of resources since the actual demand for concrete roads is not clear.

8 Financing from Earmarked Charges Advantages: fair – charges are paid only by road users; promotes rational use of infrastructure; reduces distribution via budget and functions financed by the state; reduces pressure on the budget; reduces unfair competition of various modes of transport. Disadvantages: Calculation of actual infrastructural costs is complicated and expensive (a serious problem); Collection and administration of user charges cause additional costs.

9 Conclusion on Alternatives and Other Circumstances (Intermodal Competition, Environmental Protection, Fiscal Discipline) Taking into consideration: the tendencies of economy, technological possibilities, the following can be stated: The need for qualitative infrastructure will increase, The problem of congestion and other external impact will become more serious; Therefore, roads will be financed in accordance with the financial capabilities of users, i.e. through direct charges

10 Current Taxes Excise on Fuel (part of excise on petrol and diesel fuel, excise on gas for vehicles) User Charges Heavy Vehicle Charges Taxes for Exceeding Weights or Dimensions

11 User Charge From 2005 the owners or holders of heavy vehicles and buses, shall pay User Charge. Owners or users (drivers) of these vehicles having paid this charge are qualified to drive on the main roads (total length 1750 km) of the Republic of Lithuania. User Charge is differentiated according to the duration (day, week, month, year) and it is controlled by the State Tax Inspectorate.

12 Road Vignette The Government of Republic of Lithuania has approved a new form of the User Charge payment. From the 1st of July, 2007 vignette system will be applied for the usage of the highest category roads in Lithuania. Charges will remain the same; the form of payment will be replaced by vignette, which will be purchased in gas-stations and on the board crossing points of the Republic of Lithuania.

13 Road Financing After Reform in 2005 Road charge from turnover is not imposed Funds for financing roads are formed from: registration and user charges of the existing scope, EU funds, excise on fuel. Received EU funds are included in RMDP; Losses due to the revoked road charge from turnover are compensated for by EU funds and excise on fuel; Registration charges do not exceed those of competitive countries haulers (minimum required EU tariff).

14 Road Financing 2004–2008

15 Road Charges in the Future Road charging systems should be gradually replaced by direct road taxes (charges) or user charges by expanding their basis to implement the principle user pays.

16 Thank You for Your Attention Donatas DUDONIS Lithuanian Road Administration

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