Charging for Road Freight in the EU

Using the E3ME economic model of Europe, the paper shows that a tax on road freight tonne-km can benefit the European economy, as part of a revenue-neutral fiscal package with reductions in employers’ taxes. The charges cover the future average internal costs of road freight, excluding congestion. The revenue from these charges is returned to the economy (recycled) via reductions in employers’ contributions to social security. GDP increases slightly by 0.3 per cent, and employment by 0.5 per cent, relative to the baseline. Road freight decreases by 6.6 per cent, and industrial output increases by 0.21 per cent, while all socio-economic groups experience an increase in real PDI.