AXES ARE FOR RAISING MONEY
Page 79
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'AVING introduced us to the intricacies of a selective em. ployment tax, the Chancellor may be in the mood to examine ✓ unorthodox methods of raising revenue. He should be ri as little encouragement as possible. Past experience warns hat a new form of taxation is introduced only because it nises to produce a lot of money and that it is never counterneed by the abolition of another more traditional tax.
these circumstances the pros-of another round of discussion on pricing and infrastructure costs t good news. The signs are beig to multiply. Mr. H. E. Osborn, troller of the Transport Holding oany, in his excellent paper on haulage and roads, found it priate to put one or two points e Chancellor. He was advised in Budget statement each year to ate the taxation of road users Iwo parts, a payment for the use e roads and an indirect tax on tmption expenditure, "analogous a on cigarettes and alcohol".
the vehicle licence duties and fuel tax by commercial vehicles, Mr. Osborn its, should be devoted to the first of two causes "on the grounds that there case for indirect taxation on public ager and road haulage services". The account would also receive the revenue licence duties on private cars plus a irtion of the tax on the fuel which they me. The remainder of the tax would the Chancellor as part of his ordinary tie.
YARDSTICK LACKING
e rising use of the roads by motor es, says Mr. Osborn enthusiastically, mean a rapid increase in the road Lilt "and would provide some yard as to a reasonable level of expendim roads—a yardstick which at present idly lacking". He leaves open the oility of setting up a road authority minister the fund thus created.
:ten they are considering a proposal is sort it is in the nature of Chancelto ask what there is in it for them. Dsborn's idea is ingenious and the dison he makes -between public services private frivolity is neatly contrived to motorists to a fury which they will lifficulty in justifying. The only flaw is ikelihood that, by the time the idea nen processed and brainwashed by the wry, it will somehow or other emerge as an official proposal for higher rates of taxation all round
Mr. Gabriel Roth plunges more deeply into the battle. As a consulting transport economist and a member of the Smeed Committee on road pricing which reported in 1964, he has obviously made a considerable study of the subject. The fruits of his research are condensed in a booklet published by the Institute of Economic Affairs entitled A Self:financing Road System. „
The concept of user cost pricing is the thread with which Mr. Roth holds his argument together. He is encouraged by his work on the Smeed Committee to believe that suitable techniques can be developed for charging each road user not only for his straightforward travel on the roads but also for the congestion which he helps to create. The cost will be greatest at peak hours in the centre of busy towns. The charge will therefore discourage the use of vehicles in these circumstances and at the same time draw attention to the places where road development is most needed.
The revenue would not go to the Government. As Mr. Roth puts it almost brutally: "Road investment in Britain has been under public control for the past 50 years and the results have not been encouraging". No indeed! If roads were treated as an industry and put on a commercial basis, "with one or many suppliers empowered to raise revenues and invest surpluses in accordance with the economic principles that govern the optimum use of resources, much of the difficulty of raising funds for road improvement and urban renewal would disappear".
THE PROBLEM Perhaps Mr. Roth does not mean exactly what he says. There has never been any difficulty in raising funds. The problem has been to get the Government to spend the funds on road development once they have been raised. As Mr. Roth's stimulating exposition unwinds the reader becomes more and more conscious of the Chancellor looking over his shoulder, not so much for enlightenment on road fund administration as for hints on more painless ways of attract
ing revenue from road users.
On at least' one point Mr. Roth and Mr. Osborn are in agreement. Taxation for roads should be kept separate from taxation of road users in order to provide revenue for the Treasury. Mr. Roth goes further. If the Government decides it has to tax transport, he says, it should tax all forms of transport equally—rail as well as road. Present Government policy is "to subsidize transport by rail and to tax transport by road". The effect is to discourage new methods of transport "for which users are queuing up to pay" and to encourage the retention of old methods—"by rail", Mr. Roth adds so that his readers shall not miss the point --"for which users are not prepared to pay".
UNCOMFORTABLE SUSPICION Perhaps Mr. Roth is an optimist or perhaps he is saying what he thinks is right regardless of, the practicability. Whatever the theoretical arguments the Government will never sacrifice the increasing revenue derived from taxing road users. The uncomfortable suspicion is that, if Mr. Roth's proposals for road User taxation are given consideration, they will become a new impost, a means of raising money in addition to the fuel tax and vehicle licence duties.
Unlike Mr. Osborn, Mr. Roth sees no reason for treating private cars and commercial vehicles on a different basis. The effect becomes apparent when he considers how road users should be charged. For ordinary costs, excluding the cost of congestion, he suggests reassuringly a charge of 10d. a gallon as being "about 'right for private cars". However, he continues, "a tax of this magnitude would not be sufficient to cover the road use costs resulting from the passage of heavy vehicles, particularly diesel-engined vehicles". Prudently he leaves his readers to guess what additional fee would be appropriate.
Considered in isolation road pricing is a dangerous subject. The Smeed report was intended as one of many which would all play their part in the formulation of a comprehensive transport policy. Road operators should watch carefully to see that any further discussion on the cost of the roads does not influence the Government into taking uncongenial decisions.
Janus