RHA: Brussels HGV levy challenge “nonsense”

The Road Haulage Association (RHA) has spoken out against a decision by the European Commission to challenge the legality of the HGV road user levy, the net effect of which has been to bill foreign truck operators for their use of the UK road network.

Introduced two years ago, the levy raised £46.5 million for the UK Treasury from foreign-registered vehicles in its first year of operation.

In order to avoid falling foul of EU competition law, the levy was also designed to be payable by UK-registered vehicles – but these payments were for the most part offset by corresponding reductions in domestic vehicle excise duty (VED).

But on 28 April, the European Commission stepped in to challenge what it called “the discrimination of drivers from other member states” both in the United Kingdom as a result of the road user levy, and in Germany, as a result of a road charging scheme for passenger cars launched last year.

In a statement, the EC said it had: “stepped up legal action against specific road charging systems in Germany and the United Kingdom which do not respect the EU’s single market rules.”

The statement continued “The Commission supports the ‘user and polluter pays’ principle according to which drivers pay road charges that can then be used to support infrastructure maintenance. Different models of road charges are possible and, indeed, most member states in the EU have put such charges in place.

“It is the Commission’s duty… to ensure that such charges do not discriminate between domestic and foreign drivers in the EU… [It] must now take action to protect drivers from discrimination based on nationality.”

On the specifics of the UK’s HGV road user levy, the Commission stated that: “After thorough analysis, the Commission has today set out its concern that the HGV levy discriminates against non-UK hauliers…

“The United Kingdom has two months to respond to the concerns put forward by the Commission. Should the Commission consider the reply unsatisfactory in addressing these concerns it will consider moving to the next stage of infringement proceedings and sending a Reasoned Opinion [in which the EC would outline its legal position] to the UK.”

The EC’s position is that compensating only domestic operators by a corresponding reduction in VED “means that national users are de facto not paying the road charge.”

The Commission suggested means of avoiding this “discrimination”, such as the revision of vehicle taxes for nationals “when introducing a road charge based on criteria other than nationality,” for example, based on environmental costs and/or infrastructure charges.

Such a move “would avoid a 1:1 link between the road charge and the vehicle tax and, therefore, a discrimination of foreign users,” the EC said.

It also advocated distance-based user charges – i.e. proportional to the number of kilometres driven. These “better reflect the actual costs of [road] use and pollution”, said the EC, and would rule out “a blanket vehicle tax compensation for all users because such taxes are, by definition, not proportional to the distance driven.”

RHA chief executive Richard Burnett called the challenge from Brussels “nonsense”.

“The levy breaks neither the letter nor spirit of EU law,” Burnett continued. “Brussels was fully briefed during its design and implementation – and continental hauliers continue to pay the levy without complaint.

“This is an important and successful measure that addresses an issue of real concern; to both the haulage industry and wider public.

“Foreign operators – now accounting for almost 90 per cent of international trade – paid nothing at all to use our roads, and the full burden of contributing towards road maintenance fell on UK-registered trucks. The levy changed that, within a framework designed by the EU itself.”

He said the sum paid by visiting hauliers was “modest”, comprising a £10 per day charge for occasional visitors or a £1,000 annual charge for frequent visitors.

RHA said there was “nothing new” referred to in the commission’s report, despite its claims of a “thorough analysis”.

“Currently, the levy goes as far as EU law allows towards levelling the playing field and no further,” said Richard Burnett.

“The Commission should applaud the measure for making the haulage sector fairer, not attack it.  If it persists in its challenge, I trust that the UK government will pursue a vigorous defence.”

Meanwhile Vote Leave, the official campaign in favour of the UK leaving the European Union following next month’s referendum, has branded the Commission’s challenge “EU meddling” – and said the UK could face a £93 million bill plus interest as a result, on the basis of previous European Court decisions to the effect that EU member states are “required in principle to repay charges levied in breach of EU law.”

The £93m figure was calculated on the assumption that the levy had raised a similar sum in 2015-16 as it did in its first year of operation.

Vote Leave chief executive Matthew Elliott said: “It’s outrageous that a policy designed by our elected government to create a level playing field for hauliers is under threat from unelected bureaucrats in Brussels.

“Much like our borders and our economy, a decision over this issue will not be made by the people we elect, but by EU judges. The bill families face from the latest EU meddling is on top of the £350 million we already hand to Brussels every week.”