Internalisation of external costs of transport in Flanders

In this study we calculate the private costs, marginal external costs, and degree of internalization for all modes in
Flanders for the period 2000-2014, with an outlook towards 2016. The private costs are the costs for the user.
For road transport these include the vehicle purchase costs, insurances, maintenance, fuel costs, etc. For transport
services (bus, train, plane) this is the ticket price. Marginal external costs are the costs the user does not take into
account when deciding to make a trip. They are called marginal as we focus on the additional effect of that one
trip. We considered congestion, environment (air pollution and greenhouse gasses), noise, safety, infrastructure
wear & tear and health.
The internalization of external costs determines the extent to which the user does take into account part of these
external costs via taxes and levies. In the case of full internalization, the user pays for all the costs he causes via
taxes and levies. Today, in most cases, the user does not pay the full costs he causes.
Based on our calculations we assessed the evolution of the degree of internalization over time. Is Flanders
heading towards the “polluter pays principle”? Which steps are needed to evolve to a better pricing? We found
that over the years the level of internalisation is mainly driven by changes in external costs rather than by a
targeted adjustment of taxes. Recent changes in taxation such as the changes in the car registration tax, the yearly
road tax and the km charge for trucks did lead to an increase in internalisation, but we are still far from full
internalisation. Moreover, it would be better to differentiate taxes not only on environmental performance but
also on time and place. The levels of internalisation are also very different – not only between modes but also
within the road mode.