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148 
Tax on Exports
Page 60
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EARLY in the spring, before the swallow dares, there is invariably a crop of memoranda and deputations to the Chancellor of the Exchequer, advising him on the cuts in taxation that he ought to include in his forthcoming Budget. Perhaps from the beginning, the fine edge is taken off the argument and rhetoric because, in the nature of things, proposals are seldom put forward that are calculated to increase the national revenue rather than diminish it.
In this respect, road operators have a better case than most. The contribution they make to the Treasury is going up so rapidly each year that it would continue to rise, or at any rate would not be any less, even with a substantial cut in the rate of taxation. It seems likely, for example, that if there had been no rate increases in the year ending March 31, 1962, the revenue from road vehicle users would still have been about the same as for the previous year, despite the loss to the Exchequer of the revenue from purchase tax on commercial vehicle chassis.
It need hardly be pointed out that, in fact, there were several rate increases. Vehicle licence duties went up by 20 per cent. in last year's Budget, and 2d. a gallon was levied on lubricating oil. In the Lillie Budget of July, 1961, a further burden was added by a 10 per cent. surcharge on all hydrocarbon oils, a comprehensive term that included motor spirit and derv, and lubricating oil once again. These various new taxes, plus the increase in purchase tax on cars, are likely to bring in over 00m., even during the eight months or so for which most of them will have been in operation by the end of March. The total collected from road users will be something like 050m., rather more than 11 per cent. of the entire national revenue.
It is interesting to recall that the proportion was only three per cent. as recently as 1948, when motor fuel tax was 9d. a gallon. No wonder that, in the annual pilgrimage to the Treasury, the organizations representing road users should take such a prominent part. Considered objectively, their case seems almost incontrovertible for a reduction in taxation—taxation that, on whatever basis the calculation is made, must cover, many times over, all the money spent on the roads. If anything, there are too many facts and figures to prove the ease.
IN the past they have invariably found the Treasury complacent, and one may be excused for fearing that the result will be the same in 1962. From the point of view of the Chancellor, the fact that the revenue from road users is going up by leaps and bounds is the best possible reason for stoking up the process rather than damping it down. If it brings in more than one-tenth of his income, he might think it folly to interfere, especially as most of the money comes in with an admirable economy of effort on the part of the tax-collectors. All the liquid fuel comes by sea, so that it can be checked on arrival; and whoever heard of anybody smuggling the stuff in?
Despite Treasury indifference, as time goes on it may be less and less possible to escape at least one unpleasant consequence of the high rate of taxation on road users. A familiar argument has been that, because three-quarters of motor fuel consumption is for commercial and industrial purposes, and because several transport operations may be needed from the collection of the raw materials to the delivery of the finished product, the tax on transport is primarily a tax on industry.
D24 No sign has so far been given by any Chancellor that he accepts the argument. On the contrary, his latest impositions were supposed to be part of a policy designed to keep down industrial costs, while at the same time discouraging unnecessary public spending. If the contradiction between theory and practice was brought home to him when the Road Haulage Association recommended a general increase in rates, he kept the knowledge to himself.
Apart from unmistakable evidence, such as a rise in transport rates, there may be some difficulty in proving the exact effect of fuel and vehicle taxation on trade and industry. If it is a burden, every trader and manufacturer in the country must feel it equally. The Treasury have a source of income that is easy to collect, and it might be that tower taxation, with an accompanying fall in rates, would make the railways an even greater financial burden than they are. These are reasons That may all seem to have considerable weight, so long as the discussion restricts itself to transport in Britain.
PERHAPS for the first time, the Chancellor this year may not be able to keep the discussion within these bounds. As successive deputations have pointed out to him in.the past, transport costs inflated by taxation are a brake on exports. This will become even more obvious if closer ties are established with other countries in Europe. Goods will flow across national boundaries much more freely than at present, and the handicap to manufacturers in a country with unnecessarily high transport costs will become correspondingly more apparent.
Operators may find the danger more serious and more immediate. For the first time they will find themselves exposed to foreign competition in Britain. The bold spirits among them who are already experimenting with services into Europe are having a foretaste of what is to come. Continental hauliers are offering to look after the export traffic of British manufacturers. If there is anything like a satisfactory response, those hauliers will be the first to seize the opportunity Britain's entry into the Common Market will provide of extending their business to this country. For operators of every nationality, the transport needs of the whole of Western Europe are there as a prize to be won through competition. Many British hauliers are aware of what is at stake, and believe they have the enterprise and facilities needed for success. It would be a pity if their efforts were thwarted by too high a level of taxation and the consequent inability to keep their prices down to a competitive level.
In an approach to the Government along these lines, road operators are not alone. The re-imposition in last year's Budget of 2d. a gallon on liquid fuels used for purposes other than transport was a blow to many manufacturers. The amount raised by this means may not be much more than £50m. in a full year, small beer by the present standards of road taxation: but it has been a timely reminder to trade and industry. They have seen from a new angle the danger they face from an excessive level of taxation on the use of the energy without which they would starve. One calculation is that the share of industry, commerce and business in oil duties of every kind is now about £408m. a year. There is a growing disposition in industry to see this figure as a whole that ought to be reduced, rather than to be content with the reduction or abolition of last year's 2d.