THE FINANCE OF ROADS.
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Taxation of Commercial Vehicles. The Railway Companies' Grievance, The Problem of Rural Rates.
By W. Rees Jeffreys.
rpWENTY-THREE years ago, in association with
Col. R. E. Crompton, C.B. (its first chairman), and Mr. E. S. Shrapnell-Smith (its first treasurer) I organized the Motor Van, Wagon and Omnibus Users' Association. Its object was to advance the interests of users of heavy motor vehicles. Later it changed its title to The Commercial Motor Users Association. At that time I cherished a confident opinion as to the future importance and public value of the motor van and the motor omnibus. In 1903 this confidence was shared by few. The formation of the Association was opposed, in fact, by some of the leaders of the ricing and private car movement. The rapid growth of commercial and of public service vehicles has created, however, a number of difficult problems. The most important are connected with the finance of roads and bridges, some of which I propose to discuss in this article.
• Should Taxation Be Increased ?
Increased taxation of heavy motor vehicles has been suggested in some quarters. The Ulster Government has already imposed increases on commercial and public service vehicles in the northern counties of Ireland as from January 1st last. The Chancellor of the Exchequer, in his reply to the County Councils' Deputation on January 27th, showed that he had been impressed by those who were anxious to increase the heavy burdens already imposed on the owners of these vehicles. He said :—
"Reference had been made to the enormous damage caused to the roads by heavy vehicles. This was clearly a subject which called for examination. At present there was no float that the existing system of taxation was unfair and uneconomic in its incidence and that ratepayers were, in effect, subsidizing certain users of motor transport, and this in competition with and at the expense of the railways, which were themselves among the largest ratepayers in the country."
What is the case for increasing the taxation on commercial vehicles? What, indeed, is the case for taxing commercial vehicles at all?
Taxes For Improvements Only.
Prior to 1910, commercial vehicles in this country were exempt from taxation. In 1888 Mr. Goschen. then Chancellor of the Exchequer, proposed a van and wheel tax. He had to withdraw it. Public opinion declared that a tax on road transport was not in the public interest. In 1909-10 taxation was imposed on the owners of commercial vehicles, but it was imposed indirectly by way of the petrol tax. This tax was not levied for the maintenance of roads. It was levied for the improvement of roads. The case for imposing an improvement tax upon commercial motor vehicles and not on commercial horse-drawn vehicles was that the owners of motor vehicles desired the roads Unproved, whereas the owners of horse-drawn vehicles were content with the roads as they were. The motor owner was willing to pay some taxation in order to get the improvements lie desired. It was not at that time suggested that the motor owner should pay for maintenance. That came at a later stage.
Maintenance a National Interest.
In 1914, the Government of the day introduced a measure authorizingcontributions out • of the Ex-. chequer towards the maintenance of first and second
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class roads. It was not then suggested that the motoring community should pay this tax. It was to be a charge upon the general revenue of the country. The War alone prevented this Bill being passed into law. When, in 1919-20, the question of a Government grant to maintenance again took practical shape, the commercial motor users of the country agreed, as a temporary measure, to accept the burden until such time as the State could transfer it to the shoulders to which it properly belonged—the general taxpayer. The following paragraph appears in the report of the Departmental Committee on. Motor Taxation in 1920 :— "They consider this (the increased contribution by motor owners) should only be regarded as a temporary arrangement due to immediate necessity to provide moneys for roads and to the existing financial conditions, and that at the earliest opportunity the Exchequer should provide out of general funds a fair and just proportion of highway expenses."
Unfortunately, the willingness of the owners of commercial and public-service vehicles to shoulder the burden which was never properly their own is being used against them. The efficiency of the system of taxation adopted and the growth of motor vehicles has given an abounding revenue. Taxation so cheaply collected tempts the authorities both to appropriate it and increase it.
Taxation According to User.
In the meantime, there has been much advocacy of the doctrine of taxation according to user. It is alleged that the commercial motor users use the roads and wear the roads more than any other class of vehicle, and therefore should pay more. This doctrine of taxation according to 'use" or "benefit" is one of the theories of taxation which is always being revived. History has shown that the theory of "taxation according to benefit" is attended with dangers and, in fact, is rarely successful. The turnpike system was an attempt to maintain the roads in this. country at the expense of the user. Under the turnpike system the owner of a vehicle paid according to his use of the road. Yet experience proved that the turnpike system was economically unsound and financially disastrous. People who invested their money in turnpikes lost most of it, and a different system had in time to be substituted.
Where, for example, is the system of taxation according to use to begin and end? It is impossible to stop at motor vehicles if this is to be the basis of taxation. Let us consider a concrete ease. The railway companies, according to some recent statistics, own and use about 3,009 motor vehicles, and about 33,000 horse vehicles. • If taxation according to use, or wear and tear upon the roads, is accepted, it is patently unjust to increase the taxation on the. 3,000 and leave the 33,000 untaxed. The damage they do to the roads and the wear and tear imposed upon the •roads is considerable, and if taxation by use be the criterion of taxation, they must pay their contribution thereto. Taxation according to use means in equity a. revival in some form-or 'other of Mr. Goschen's van and wheel tax.
Railway Companies and Road Traffic.
The railway companies at the present time are making a considerable propaganda directed against the commercial and mffilie-service vehicle. The sub
ject is referred to by railway chairmen at their annual meetings. We have already seen that Mr. Winston Churchill has been influenced by their arguments. A memorandum has been prepared recently by the Railway Association and sent to the Urban District Councils Association. The Chancellor has doubtless been supplied with a copy of it. It is a one-sided statement which will not bear critical examination. It is pointed out, for example, that the railway companies are the largest single ratepayers. That may be so. They are also the largest single users of the roads. Without the roads the railway companies, whose condition is had enough to-day, would be much worse. All the passenger traffic using the railways has to use the roads to reach and leave the railways. About ninety per cent, of all railway goods, traffic has to be transported by road for some portion of its journey. When the railway contribution to roads is analysed and totalled, it will be seen that the railways pay a very modest contribution to the road service, having regard to the benefits they derive therefrom.
The Railways Real Grievance.
The real grievance of the railway companies arises from the unequal way in which the rating burden is distributed. In some rural parishes where railway property bulks large, the burden of local rates is paid almost entirely by them. This grievance will be largely remedied when the Bill dealing with the rating of railways passes into law. Railways will then be assessed as a whole and not in any particular area. But they are not the only sufferers by our defective rating syStem. The inequalities of the burden between one rural area and another is a constant source of grievance to the agricultural community: The present and preceding Governments have been subjected to great pressure to give additional relief in respect of highways in rural areas. This pressure has been so effective that Governments have diverted from purposes oh which it could have been more economically spent Road Fund money to improve rural roads and to relieve the pressure of rural ratm it has been found less troublesome to endeavour to keep rural ratepayers quiet by throwing them doles • from Imperial taxation rather than by a reform of the present rating areas the smallness of which is the principal source of trouble.
The passing of the Agricultural Rates Act in 1896 gave a large grant to the relief of the rural ratepayers. The Agricultural Rates Act, 1923, further increased this grant. Later, the Road Fund was raided to the extent of £1,300,000 for rural roads and, later, another million was taken out of the Fund for the same purpose. Last year the Government relieved certain agricultural estates from death duties to the extent of about £500,000 per annum, Unfortunately, this policy, so far from keeping the rural ratepayer quiet, only increases his demands. It does not remove the root of the evil. It intensifies it by making the differences in the burden between one
rural area and another still greater. It gives relief in areas where it is not required as well as in areas where it is needed. While itis true there are many rural areas which are over-rated and over-burdened, there are other areas which are too lightly rated. It is the difference of the burden falling upon one rural ratepayer as compared with another that is the constant cause of irritation.
To give some idea how varied is the burden falling upon ratepayers in different districts for the costs of roads which they use practically in common, two instances may be cited :
(1) STAFFORDSHIRE.—ID the rural district of Walsall, the highway rate is 52.8d. and in the Newcasileunder-Lyme rural district in the same county it is 2.7d. There is, therefore, a difference in rates on neighbouring ratepayers of 50.1d. In other words, one ratepayer is paying 18+ times more than the other in the same county for the same service.
If the rural rate for highways were averaged over the entire county it would be I5d.
(2) WEST RIDING OF YORKSHIRE.—The highway rate in the rural district of Kiveton Park is 64.2d. and in the Bishopsthorpe rural district 6.9d. The difference between the two .areas is 57.3d., or the ratepayer in the Kiveton .Park area is paying 81 times more than that in the Bishopthorpe district.
The history of highways in this country shows that large improvements in highway adminstration take place concurrently with the enlargement of the highway authority and of the rating unit. The time has now come for a further enlargement in rating and highways areas to be made.
Capacity v. Use as Basis of Taxation.
This short examination of the field of Road Finance, so far as it affects commercial and public-service vehicles, appears to show.:— '(1) That the Chancellor has been advised wrongly if he thinks that ratepayers, and particularly the railway companies, are subsidizing commercial users of motor transport.
(2) That there is a case for taxing users of heavy motor vehicles for road improvements, bet none for taxing them exceptionally for maintenance.
(3) That taxation according to use is an unsound principle to apply to road. maintenance.
(4), That the grievance of the railway companies and of the rural landowners is largely a question of rating areas.
It may be suggested, finally : (1) That as cheap transport is essential to cheap production, it will not help the manufacturers of Great Britain to compete in the markets of the world if transport is burdened by taxation which should juotly be borne by others, and (2) That experience shows that in a fundamental service like roads "taxation according to capacity" is a sounder working principle than "taxation according to benefit."