Political Cornatentarz By JANUS
Page 54
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Cut and Come Again
ROAD users have for most of the time had a divided attitude towards Government taxation and expenditure. They have resented more or less equally having to pay so much in taxes and seeing so little spent on building roads. Their policy has been to persuade the Government to make both ends meet, or at least come a little closer together. Less taxation and mere roads would make vehicle owners completely satisfied. Some of them can remember a time when Chancellors of the Exchequer would agree that they taxed fuel in order to pay for the roads.
The Chancellors have long ago forgotten this. They tax fuel because it is an easy way of getting revenue, and they dole out money for roads because they have little choice. By degrees, road users themselves are giving up what used to be their staple argument. They are discussing alternatives, such as a public loan, for raising funds to build roads. With this part of their twofold policy adrift from its old anchor, they are searching for some new approach on the fiscal side.
Continuing Campaign
Half a crown a gallon is a lot to pay in tax on liquid fuel that to commercial road users is an essential and expensive item without which they could not run their businesses. The continuing campaign, for a reduction is confronted all the time with a formidable obstacle. The appetite of the Treasury has become adjusted to the tax at its present level, and the Treasury are seldom in a mood to curb their appetite.
The tempting, but the wrong, approach to the problem • is to suggest that some other section of the community should take over part of the burden of special taxation now borne by road users. There is no mathematical reason why a remission in fuel tax should not be made up by an increase in income tax, or by spreading the load over all users of imported fuel. The only snag is finding a Chancellor sufficiently devoted to the interests of road users, and sufficiently dead to those of his own party. He is not necessarily being cynical if he hesitates to take action likely to lose a considerable number of votes at the next election.
Bullying Tone
On the assumption that the Government are there to do what we tell them, most organizations with an axe to grind adopt a bullying tone when they approach M.P.s and Ministers. There is none of the reasonableness that the officials of the same organizations find so sweet in their negotiations with each other, or in parleys with their wives over the allocation of domestic chores. If an industry has _a grievance, then Parliament had better do something about it, or accept the negligible consequences.
Little evidence can be found that this sort of approach is suCeessful. The people who continue to use it do so because, naturally enough, they believe in their own cause, and find their own arguments overwhelming. The fact that the Government remain obstinately underwhelmed is proof of the depravity or ignorance of politicians.
The supporters of a decrease in the fuel tax should begin their campaign with an attempt to understand the Government's point of view. It is an illusion to suppose B20 that the policy of any Government is completely logical. The Suez crisis showed how narrow is the margin of safety if the usual sources of fuel supply are interrupted. In spite of this, every encouragement continues to be given to industry to change from coal to oil, and there is no sign of any official hesitation on this point. No Government is likely to consider taxing fuel supplied to industry in order to save the pockets of road users who, ii must be admitted, would have no 'option but to pay even if the tax were doubled.
There is 'a case for making the railways pay at least some tax on the oil fuel they use for motive power. This is not likely to make much difference to the total revenue from the fuel tax. Other users of oil include farmers and the general public, neither category providing very docile subjects for a new tax. The more one looks at the situation, the more impossible does it seem that vehicle operators will ever get rid of any part of the existing tax, save as part of a general tax reduction that one can scarcely envisage.
Inflationary Spiral
However, Government policy is made up of more than one strand. Another consideration is the desire to stop the rise in prices, the inflationary spiral. Remission of part of the fuel tax might help by holding in check the cost of transport, and for this reason might find favour with the Government, but for the need to make up the revenue in another direction.
As a matter of fact, the% is a possible way for the Gove,rnment to meet both objects, to cut and come again. Revenue from fuel tax does not stand still. It increases substantially every year, and has done so by approximately 5 per cent. annually since the tax became 2s. 6d. in March, 1952. For the last financial year, but for the special circumstance of fuel rationing, the Treasury would have received the same total revenue from a 25. tax as they received with the tax at 2s. 6d. in the year 1952/53.
Government Attack
Assuming a continued rise in consumption of 5 per cent. per annum, road users might, in their next approach to the Chancellor, suggest a corresponding scaling down of the tax. There would be no loss of revenue from year to year, but vehicle operators would have a stimulus to keep rates and fares down. The drop in the price of fuel would not in itself be sufficient to obviate any rise in the price of transport, if other costs, including wages, continued to go up at the same pace as in recent years. The standstill on fuel must be part of a general Government attack on inflation.
The transport element is important in the end cost of most products, and the comparatively modest fiscal step have suggested might have a surprisingly significant effect on prices. Hauliers and passenger vehicle operators could not be expected to give any pledge on rates and fares on the strength of this single concession. They would hardly be warm advocates of the concession on such an understanding. If other steps could be taken in other industries for a similar purpose, the public imagination might be kindled, so that everybody con• cerned would become willing to co-operate.