PIECE OF CAKE
Page 71
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LONG before this the Chancellor of the Exchequer has made up his mind exactly what proposals he will put in his Budget and there is virtually nothing that could make him change his mind. The various interests and pressure groups that have made him their target for several weeks past have lapsed into silence, and are no doubt preparing their ammunition to begin firing again almost before the Chancellor has sat down. The public, which has been fed with every possible kind of forecast, is now at last prepared to wait upon events.
Through their organizations road users have been vigorous in staking their claim, but in private they have hardly been optimistic. The paradox of their case is that the stronger it becomes the less likely is it to be acknowledged by a cut in taxation. They can point to the practical certainty that if taxation continues at its present level they will be paying something approaching £50m. more next year than this, approximately a third of the whole of the Government's road expenditure. The British Road Federation estimate that by 1967 the annual revenue from road users will have reached £880m., of which over £700m. may be retained by the Exchequer after meeting the cost of the roads.
UNFORTUNATELY, the Government can make these calculations with equal ease and regard the conclusions from a different point of view. The ideal tax is, among other things, one that presents little difficulty in collection, is levied on an imported commodity that it would not be feasible or profitable to smuggle, and can be equitably spread over a wide section of the community. The fuel tax, which provides the lion's share of road revenue, meets these requirements admirably, with the additional advantage that it increases each year.
Public resentment, especially among vehicle owners, is not negligible and usually rises to its highest point around Budget time. On the other hand most people dislike taxation on principle and the politicians know from experience that indignation seldom reaches explosion point when there is no actual increase in the rate of a tax. So long as the Chancellor refrains from placing fresh burdens on the road user he will be able to have his cake of grudging public acquiescence and eat it too in the form of extra income.
Although probably a long way from admitting it, the car owner is coming by degrees to accept a tax of 2s. 6d. a gallon on his fuel. The gradual decline in th'e value of money makes the half-crown appear less and less to him. There is an equally comforting trend towards better fuel and its more economic use, mostly in the form of more miles per gallon. The Government are getting more and more out of road users but possibly less and less out of the individual user. At the back of his mind he may hold the opinion that this is not a bad arrangement.
The commercial operator has a stronger case for a reduction in tax. He is an increasingly important element in British trade and industry. Once again the B.R.F. have provided statistics to illustrate the point. The estimated index figure of 119 for industrial production in 1960 is based upon a figure of 100 for 1954 and the number of ton-miles covered by road and rail in the six years rose from 41,600m. to 54,000m. There was a substantial decline in the volume carried by rail, however, whereas the road figure rose by over one-third to a total of 26,700m. ton-miles.
For passenger transport the picture is not quite the same. Between 1951 and 1959 there was an increase, small but unmistakable, in the nuniber of passenger-miles covered by rail, whereas public road transport showed a decline from 51,300m. passenger-miles in 1951 to 45,300m. in 1959. Mileage by car almost doubled in the same period and, in fact, is now as considerable as public transport by road and rail together.
THE Government have their stock answer to arguments of this kind. They point out reasonably enough that if the revenue from one source is reduced it must be made up from somewhere else, and road users are hardly in a position to say bluntly what other sections of the community they think should be made to pay more. Whether or not a tax on road transport is a tax on industry, it must have some effect as a brake on the growth in the number of road vehicles. It may be argued that this at least eases the problem of road congestion. The fact that high taxation keeps up rates will not weigh heavily with a Government that have already committed themselves to subsidizing the railways and may have to pay out mdre if the competitive position of road transport is still further enhanced.
The case for reducing road taxation has been put forward year after year in terms that change very little and the Government reply has also the merit at least of being consistent. The main purpose or the main effect of the exercise may be to provide a further opportunity to show the growing need for a better road system. The statistics about ton-miles and passenger-miles must be studied in conjunction with the fact that the number of actual road miles has scarcely increased at all.
THE extra cost in which road taxes involve trade and industry would be more than compensated by the savings that would be made if a sufficiently bold programme of road expenditure were put into effect. The commitment by the Government would not have to be excessive, at any rate over the next few years. The B.R.F. themselves ask no more than that capital spending on new and improved roads should be permitted to rise to "not less than £200m. a year," within the next three or four years. This may be compared with the Government's own estimate of an expenditure of approximately £100m. in the year 1962-63, and, even by the B.R.F. standard, Government road spending for all purposes would be no more than £250m., or something like a third of what might reasonably be expected from taxation at its present level.
Assuming that no reduction in tax rates is possible, road operators must keep up the pressure intended to make the Chancellor more generous towards them. What must be particularly strongly resisted is any suggestion of an increase in tax. which may take the form of some new imposition such as the payment of tolls. A road scheme that is not worth doing for itself should not be launched. If there is a need for it the policy must be to give every inducement to operators to use it. To charge a toll would be just as sensible (or absurd) as making them pay extra for the privilege of continuing to use the old roads that previously provided the only available route.