Road traffic taxation in Germany: the present system, its problems and a proposal for reform

This article examines the taxation of road traffic in Germany and makes a proposal for its reform. The policy-oriented approach used here is inspired by the tradition of economists like Richard A. Musgrave in the United States or Günter Schmölders in Germany who always sought to integrate fiscal theory and fiscal practice. Thus, our considerations are guided by three basic principles of taxation which are well-founded theoretically and, at the same time, flexible enough to deal with issues of policy: fairness, efficiency and practicability. They are used, at first, to show what a systematic taxation of road traffic would look like. Then, actual road traffic taxation in Germany is described and measured against this standard. It turns out that none of the different road traffic taxes or fees in Germany conform to the principles of taxation. Therefore, finally, a proposal for reform is made which is discussed not only in terms of fairness and efficiency but also in terms of political acceptability and of compatibility with European law. It is found that the reform proposed complies with the principles of taxation and European law, but that, at present, it may be difficult to win public acceptance for one of its parts