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23rd February 1968
Page 51
Page 51, 23rd February 1968 — Janus comments
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Which of the following most accurately describes the problem?

Where Geddes feared to tread

OVER SEVERAL YEARS, expectation has been built up that the experts in the Ministry of Transport with the help of yet more experts from outside were at work on a survey which would settle once and for all the tiresome problem of track costs.

More recently Mrs. Barbara Castle announced that the long task was nearing completion and that by a happy coincidence the results justified the new "wear and tear" tax on heavy goods vehicles proposed in the Transport Bill. Now at last the report on road track costs has been published. The mountain has been in labour and brought forth a sterile mouse.

Reluctance

Between the lines can be read a marked reluctance on the part of the authors to make any pronouncement on the subject. They have not exactly rushed in where Geddes feared to tread. As their inquiry dragged on its tortuous way it must gradually have dawned on them—as was apparent from the beginning to almost everybody except an economist—that they were wrestling with what has been aptly described as a nonproblem.

It has always been generally accepted that roads must be built and maintained and that the users should meet the cost. Taxation provides the obvious means of collecting the money and the amount charged for each vehicle should to some extent correspond with its size and with the use it makes of the roads.

Complications arise. The authorities who collect the taxes and build the roads have their own ideas on such matters as the size and scope of the road programme, restrictions on the use of certain roads, restrictions on certain categories of roaduser and the rate of taxation.

Decisions on these and other problems are often influenced by the need to protect the railways. Political factors have certainly helped to ensure that the annual revenue from road taxation is invariably much higher (at least twice as much on the most generous reckoning) than all the money spent on the roads by both the central Government and local authorities.

On the cheap

In these circumstances road-users might at least be spared the accusation that they are getting their track on the cheap in comparison with the railways. Suggestions to this effect have been made over the years.

The railways went so far as to submit to the Geddes Committee a memorandum purporting to prove that the operators of the heavier commercial vehicles, although they paid tax at a higher rate than anybody else, were still not meeting the cost which they represented to the community.

Various other bodies including the Ministry carried out surveys of their own and pro duced very different results from those of the railways. The evidence of the Ministry, which cleared operators from the imputation that they were thriving at the expense of other road-users, was widely accepted as closing the subject. The Geddes Committee very wisely declined to give a verdict.

Bogged down

The Ministry has proceeded with its investigation. The latest report reveals how bogged down it has become. It has examined several complicated methods of assessing and allocating road track costs and decided against each one at least for the time being and in the present state of knowledge.

The MoT has finally returned to the straightforward approach to the problem. It has taken those items—amounting to £450m in the year 1965/66—which can clearly be identified as money spent on the roads and has set against them the total of £926m from fuel tax and vehicle excise duties. The total contribution to revenue from each class of road-user is known and against each amount is a proportion of the road expenditure calculated in accordance with the formula used in the earlier submission to the Geddes Committee.

The results are summarized in a table showing the ratio between revenue and cost for each of the main categories of road user.

Another table shows that the revenue/ cost ratio for heavy goods vehicles falls slightly with the increase in the unladen weight of the vehicle from 2.7:1 for the 2-21 ton category to 1.6:1 for lorries weighing over 8 tons. Although by themselves all these calculations may seem a little pointless they do establish that each category of vehicle pays in tax substantially more than its contribution towards road costs. In comparison the railways are decidedly better favoured.

If the figures prove anything it is that fair competition between the two forms of transport would be better served if road operators paid less rather than more tax. Instead of reaching this natural conclusion the Ministry report develops the fallacy towards which it has been working up from the beginning.

Relatively speaking, the argument runs: motorists pay more than commercial vehicle operators for the use of the roads; therefore the rate of taxation on commercial vehicle operators should be increased to bring in another £42m a year. The new tax will produce only £30m so that operators should count themselves lucky.

On this basis public service vehicles should be taxed at an even higher rate than goods vehicle operators and light vans should have a substantial remission in taxation. If this happened, says the report, motorists would tend to exchange their cars for light vans (why this is undesirable is not explained) and in any case "the Government's policy is to encourage public transport". Evidently even the Ministry would not dare to argue that it is the Government's policy in any way to encourage road goods transport.

Self-evident

The report confirms what is self-evident, that no two road-users get exactly the same return for what they pay in taxation, any more than two ratepayers derive exactly the same measure of enjoyment from their public library. It would be impossible or impossibly complicated to determine exactly how much each road-user should pay. The present general scale of taxation at least distinguished various categories of vehicles but is bound to be either generous or unfair to the individual user.

The Minister must take full political responsibility for her decision to impose a new tax on heavy lorries. She cannot involve the economists. Their report, as they have admitted, is "the result of combining policy judgments with economic facts and reasoning". And a deplorable result it has turned out to be.


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