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Road Financing in Lithuania. WORKSHOP ON ROAD USER CHARGING SYSTEMS 200 7-06-12, Warsaw. Why Guarantee Road Financing?. To ensure the stability of road condition (for road users – all business entities, investors, road constructors)

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Road Financing in Lithuania

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Road financing in lithuania l.jpg

Road Financing in Lithuania

WORKSHOP ON ROAD USER CHARGING SYSTEMS

2007-06-12, Warsaw


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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)


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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  • Road charge in Lithuania was revoked, which was paid from the turnover of the enterprises and made up approximately half of the Lithuanian Road Maintenance and Development Programme revenues;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 bywhich 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.


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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).


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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


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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


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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.


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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.


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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


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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


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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.


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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.


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Road Financing After Reformin 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).


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Road Financing 2004–2008


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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”.


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Thank You for Your Attention

Donatas DUDONIS

Lithuanian Road Administration


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