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SHALL THE TAXATION PROPOSALS STAND'?

18th May 1920, Page 14
18th May 1920
Page 14
Page 15
Page 14, 18th May 1920 — SHALL THE TAXATION PROPOSALS STAND'?
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Which of the following most accurately describes the problem?

The Commercial Vehicle Organizations State the Case in Favour of Not Disturbing the New Scheme of Taxation.

THE STANDING JOINT Committee of Mechanical Road Transport Associations, which embraces all the leading organizations connected with the road transport industry, has issued a manifesto, addressed to all Members of the House of Commons, in support of the Government's proposals for the new system of motor taxation.

1. In accepting the report of the Departmental Committee of the Ministry of Transport on the Taxation of Motor Vehicles, which report was adopted by the Chancellor of the Exchequer as the basis of the germane Budget resolutions and clauses of this year's Finance Bill, the Standing Joint Committee of Mechanical Road Transport. Associations, says the memorandum, is not accepting the unqualified principle that users of the highway should be taxed for its upkeep. It is merely facing an emergency in a businesslike spirit.

The Need for the Money.

The Committee desires that roads and bridges shall be constructed and maintained to a standard suitable to modern traffic requirements. It recognizes that unless the user finds a fair share of the moneys wanted at this time nothing will be done; but, if the road user must be taxed, certain principles must in equity be observed. The position, briefly put, is this :— (a) Every user must contribute his fair share. The user who consumes coal, coke or the heavier petroleum derivatives should pay equally with the user of petrol, and so too the user of benzole or power alcohol. The petrol tax with its present limitations is unable to secure this.

(b) It has been recognized by the parties affected that every class of user must contribute his fair share. This the schedule now under discussion secures, as a minute of a meeting of all motor interests held at the Royal Automobile Club on January 21st last confirms. This minute reads:— " That this meeting considers the present 'system of taxation much fairer than the proposed system of a single tax, but, assuming that a single tax is to be imposed, agrees the proposed ratio as between the different classes of vehicles. This meeting urges that, if it can be established that the proceeds of the tax will exceed the. sum required,. there should be a proportionate reduction all round on the basis of 15s. per horse-power on private motor vehicles." The estimates included in the report (page 17) show that the whole proceeds ef the agreed schedule are wanted for the present.

The estimated proceeds of the new licence duties as set out in the appendix to the report (page 16) should in itself be sufficient evidence of the fairness of the distribution. It shows that 210,000 private cars yield £3,300,000, or about 216 per car; while 170,000 vehicles, wholly used in the general trade and business of the country, yield 23,315,000, or about 220 per car. The Standing Joint Committee regrets that a section of the private car interests should attempt to reopen the question of the allocation of the licence duties.

2. It is necessary to insist upon the elements of a elsit bargain which the report of the Departmental Committee presents. It is a two-fold bargain. First between the different classes of motor users. Parse graph is of the report opens with these words " The rates of duty shown as applicable to the various types of vehicle are considered to represent as fair a division of the burden as the Committee can devise. Any departure from the general level a rates for one class or type would necessarily involve corresponding adjustments in the rates for other classes or types."

And second, between all motor users and the Government. Paragraph 25 requires that " (a) The entire proceeds (less the costs oE. levying and collecting) should be devoted to maintenance, improvement, and construction of roads and bridge's."

" (b) It should be the sole tax or levy for Imperial or local purposes to be imposed on the use of mechanically-propelled road vehicles."

3. The Standing Joint Committee regrets for many reasons a departure from the petrol duty, but it is entirely unable itself to define the petrol which is subject to tax. Motor fuels derived from petroleum vary in their physical and chemical properties by infinite gradations, and no expert is able to draw a line and say on one side is petrol subject to tax, and on the other side is paraffin which goes free. If this were the only obstacleto its continuance it 'were sufficient to condemn it, but, with substitute fuels coming on the market, an equitable fuel tax is still more complicated arid more liable to evasion.

Cost of Roads Not Wholly Resulting from Use.

The case for the petrol tax is based upon its incidence, the payment of tax being claimed to be proportionate to road user. It will be generally admitted that this is only approximate, and depends for one thing upon the character of the service upon which the vehicle is employed. Continuous straightforward running, town work, and work involving appreciable standing times represent differing efficiencies in fuel consumption, to mention this most obvious factor. But -the argument always assumes that the tax to be levied on the first mile run should be equal to the tax upon the last mile run—that there should be no reduction in rate for a large mileage. Yet the roads are built and maintained for the public use, whether they are much or little used. The costs of the roads are not wholly comprised in wear and tear, which account for but. a part of the total costs. The major portion of the total costs is attributable to the provision of facilities and opportunities for traffic movementsof kinds, and toimprovements in alignment, width, and construction. This major portion of the costs is a. standing charge, largely irrespective of user, and all motorists must share it. There is, therefore, every reason why the first 1,000 miles run should be more heavily taxed than the last 1,000 miles run. This the system of vehicle licence duties tends to assure.

4. The Budget resolutions and the proposals of the Finance Bill involve taxation which is new to many and increased to Most, and certainly to all coranlercial motor users.

In the year ended March, 1920, licence duties upon private cars under the existing scales yielded a little short of 21,000,000. In that year, 91,500,000 gallons of petrol were imported, upon which full duty at 6d. per gallon was paid, or £2,250,000 in all. The figures are not exact, but there is good reason to affirm that private motors contributed by taxation little short of S,'3,000,000. This compares with £3,300,000 set out as the contribution of private motors under the new scheme. The percentage increase must average about 10 per cent.

What the Commercial Vehicle Owners Paid in Taxation.

In the year ended March, 1920, 57,000,000 gallons of petrol were imported upon which half duty at 3d. per gallon was paid, or about 2712,500 in all. To this must be added the licence duties and fees paid by commercial motor vehicles, principally hackney carriages. The total sum cannot much exceed £800,000. This is inclusive of the petrol tax paid by doctors and veterinary surgeons.] Against this must be set for comparison the 23,315,000 attributable to hackney and commercial vehicles under the new scheme. The percentage increase must average about 300 per cent. on all commercial motors as a class.

The benefit of the rebate of one-half of the motor spirit duty evhich has hitherto been allowed to the commercial vehicle in recognition of its general public service has on the above figures largely disappeared. The Standing Joint Committee will, however, resist to the utmost the withdrawal of such rebate if the motor spirit duty is to be revived. The commercial user's easeis as good as ever it was for such eoneideration.

5. The real justification for the members of Standing Joint Committee a,ceepting-the report is that they feel there is, at this time, a reasonable claim that every road user should bear his proper share of the greatly enhanced expense of ensuring goad roads. The one provision of the report which most assists to make the proposals acceptable is the annual review. (See Clause 28.) There is need for a settlement of the road taxation question. Users want to know where they are. The report appears a real attempt to reach such a settlement, and on this ground deserves support. Such adjustments as experience proves to be equitable can be made each year.

A Further Review of the Situation.

Later on, when fresh facts arise, a review of the distribution and the incidence of the licence duty among the various classes of users might be quite reasonable. Certainly, as soon as the finances of the country are placed upon a sound footing, a review of the incidence of the charges for road construction and maintenance is imperative so that the burden may be fairly shared between imperative, Imperial Government, the local authorities, and the road users. The Standing Joint Committee reserves the right to express opinions upon both these questions when they shall become practical issues.

The Standing Joint Committee, for the reasons given in this memorandum, asks that the schedule of licence duties embodied in the Taxation Committee's report and adopted by the Chancellor of the Exchequer and, as 'shown above generally accepted, should not at this stage be disturbed. A disturb.anee of one item must result in a reopening of the whole settlement.

The memorandum -is .signed on behalf of the organizations represented on the Standing Joint Committee by E. S. Shrapnell-Smith, chairman ; R. J. Howley, vice-chairman; -and F. G. Bristow, secretary.


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