Keeping the Loot
Page 57
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By JANUS
3UDGETS in an election year sometimes contain welcome surprises, but it may still be too much to hope for a reduction in the fuel tax this time. very organization that has anything to do with roads or ad transport has made the annual pilgrimage to the reasury, and the various offerings will be dished up all fer again by members of all parties during the discussion i the Finance Bill in Parliament.
All the arguments were worked to death years ago. The tidal answers become more and more perfunctory, :rhaps betause they so obviously lack conviction. There a case for a limited tax on fuel used in road vehicles. nee upon a time, a Chancellor of the Exchequer decided raise money from users to meet the cost of the roads. [though abolished in 1955, the Road Fund is so well membered and liked that many people believe it is still existence. Hypothecation of revenues may be a term abuse among politicians, but the public, if they could : made to understand what it means, would approve of it. They regard it as only fair that the road user should ceive back what he has paid. Beyond this point, it is ogical to tax him and to leave unscathed the other nsumers of oil, who include manufacturers, farmers, ■ roestic users and, of course, the railways. During the lancial year just ending, nearly £300m. will have been ised from the motor fuel tax, about three times the nount of road expenditure by the central Government. special tax of 10d. per gallon would therefore have en justified. If the Chancellor had needed the extra venue from oil, the extra tax spread over all users would ye been about 8d. per gallon, making a total of Is. 6d. r vehicle owners.
There is an etiquette about approaching the Chancellor. is correct to ask for a remission of dues, but not to ggest taxation on other people Apart from this, road ers would make themselves unpopular if they demanded at their burden be spread over equally or more important tions of the community_ For reasons such as these, ey tread the accustomed path, and must by now be most reconciled to .receiving the customary, if entirely isatisfactory, answers.
Break New Ground All the more credit is due to the British Road Federation r their effort to break new ground. Abandoning for the sment any idea of equating revenue with expenditure, y have suggested to the Chancellor what he ought to ;ard as a generous compromise. They have conceded at he might require from road users a surplus of some 50m. annually over and above what is allocated for the ads. He can get this substantial bonus, say the B.R.F.., en if he reduces fuel tax from 2s. 6d. per gallon, °fishes the 30 per cent. purchase tax on goods-vehicle assis, and cuts in half the 60 per cent. purchase tax on rs, thus putting them on the same level as motorcycles. As usual, the calculations by the B.R.F. are impeccable. Ley take into account the expanded programme of road velopment, and budget for an increase in central )vernment expenditure from an estimated £92.3m. in the nerd financial year to an estimated £247m. in the year ding March 31, 1965.. The annual increase in the mber of motor vehicles licensed in Great Britain is ;koned as 6} per cent., which is actually below the figure ,en by the Director of Road Research for the annual ;rease over the past decade. The number of vehicles in
circulation, say the B.R.F., was 4m. in 1949, is today about 81m., and will probably rise to 12-1-m. by 1965. The tax yield at the lower rates proposed by the B.R.F. would therefore just keep pace with the road programme, as it is costed at present, and still give the Chancellor his extra £250m.
The Chancellor's comment might be that, by leaving taxation as it is, he would get almost exactly twice what the B.R.F. promise him. If he is to keep the loot, he sees no reason why he should not keep it all. Road users, when asking for some relief from their present burdens, take for granted that the Government are genuinely concerned with the correlation between taxation and road expenditure. The assumption is optimistic. Unfortunately for road users, the 41 tax in particular is almost made to measure for the Exchequer. Whatever his politics, the Chancellor agrees with his predecessors on this point. With some hesitation at first, but with fewer and fewer apologies as time goes on, one Chancellor after the other has deaided to make a little more out of oil and petrol, and none has seen fit to make a reduction, except for the extra shilling imposed as a result of the Suez crisis. It is true that each year the Opposition in Parliament move amendments to reduce the tax, but they change their mind as soon as they are in power: Important Element Most Governments, when it comes to the point, have a tender feeling towards the.,railways. Road competition continues to eat into railway traffic. The price of fuel is an important element in road transport costs, and its importance is exaggerated if, as reports allege, some operators are a prey to the regrettable delusion that any rate is profitable that shows something to spare over and above the cost of fuel and wages. A further steep decline in road haulage charges might well follow a cut in the fuel tax, and as a consequence the railways might lose more customers. Hauliers themselves, who in any case regard the present level of rates as too low, may have one or two secret reservations about whether a tax reduction is altogether desirable, In his resistance to the demands on behalf of road users, the Chancellor may be encouraged by the lack of any general public agitation. For a tax reduction he would be thanked most vociferously by the private motorist, and would be accused, however unfairly, of favouring the wealthier section of the community. People without cars would see no immediate advantage to themselves, as they would, for example. if there were a reduction in income tax.
Passenger-vehicle operators would not be able to reduce fares, unless the tax were cut substantially, by at least as much as the shilling proposed by the B.R.F. Fares may go up if the tax remains the same, but this is something the public find difficulty in grasping, in spite of considerable propaganda by the bus operators. If a fall in road haulage rates follows a tax cut, the impact upon the public will he negligible, for most people are unaware of the part that transport plays in determining the price of goods in the shops.
Whatever his private opinion on the justification for a special duty merely on the fuels used for road transport, the Chancellor is unlikely to repudiate his lucrative legacy from the past. There is more hope that he will see reason hout purchase tax.