General public budgets

General public budgets are the main source of funding for transport infrastructure
procurement in Germany. This means that on the one hand most investments are funded
through the public budgets, but also that on the other hand user contributions such as vehicle
taxes and mineral oil taxes are generally not earmarked for use in the transport sector.
However, there are several new financing instruments that have emerged in recent years
which are closer to user funding.

In the case of federal roads, there are three sources of funding: the public budget, the
motorway tolling for heavy goods vehicles (HGV), and PPP (private-public-partnership)
models. The public budget is fed by general taxation, including taxes raised from the road
transport users, in particular fuel taxes and VAT on fuel. While the latter two taxes are federal
taxes, the circulation tax is passed on to the federal states. In the 1960s, a federal road
financing law was introduced with particular focus on the extension of the motorway system,
requiring that a fixed part of the fuel tax base of that year, and by subsequent laws also of
following fuel tax increases, is earmarked for the purposes of the road system.

However, this requirement has been broadened annually since 1973 by budget laws to wider transport
system uses, and tax increases in recent years have not been earmarked. Moreover, for several
years now, due to the financial situation of the country, the amount of infrastructure
investment has almost equalled Germany’s federal credits to finance the additional yearly
debt (Rothengatter, 2005b).