The Hidden Hand
Page 57
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PECULATION on the Budget this year is even ligloonnier than usual. There are not likely to be cuts in Government spending and the extra cost f the defence programme will require new taxation. iobody has much hope of a remission of the purchase ix on goods vehicles and most motorists fear with ood reason another substantial rise in the cost of their
ael. • Several transport organizations have lodged their rotests in advance. The British Road Federation a ear ago collected from its member associations fore)sts of the likely effect of the new taxes and sent them the Chancellor of the Exchequer. A further dossier as recently submitted to show how accurate the foreists had been. The Society of Motor Manufacturers id Traders has issued a statement stressing that the xes, instead of stimulating vehicle exports, add to the ianufacturers' difficulties by raising the cost of roduction.
The protests will probably not have much effect. A iccession of Governments over the past quarter,of a :ntury has by degrees established the principle that iotoring, whether for business or for pleasure, is a ce—venial, it is true, but none the less a vice, akin to noking and drinking. Without wishing to stop the xpayer altogether from enjoying his glass of beer, or
s packet of ten, or his car, the Government fines him ndoing so in preference to drinking lemonade, iewing gum or using the railways.
The point is seldom stated as baldly as this, however,
the Government's attempt last year to explain the !,cessity of the purchase tax and the fuel tax without entioning the railways involved the use of curious and ,en contradictory arguments.
On Their Own Heads
The opinion of the Government on the fuel tax has adually changed with the growth of road transport.
t first the tax was mainly regarded as a device to itain revenue from an imported commodity. By last ,ar, Sir Stafford Cripps was able to strike the correct oral note. Petrol users, he said in effect, had brought e extra 9d. upon their own heads by not moderating eir consumption.
The official view to justify the purchase tax is that ere are "too" many" vehicles on the roads and any ove to keep the number down will be laying• up :asure in Heaven as well as in Whitehall. As the iancellor put it, "We have over the last two years en seriously troubled by the excess investment in mmercial vehicles in the home market." Sir Stafford is not the sort of person to wonder whether the "excess vestment" also troubled the investors. He had taken on himself to lay down how many new commercial hides should be sold in this country during the year, d the fact that his estimate had been exceeded was, r him, a sufficient condemnation of the road transport lustry.
He showed strangely little faith in the ability of the e-third purchase tax to achieve the desired reduction the number of vehicles, for almost immediately he :nt on to explain the extra 9d. on fuel by saying it "sonic of the other automatic methods of restrict-. ; the consumption of petrol, such as the shortage of hides, are disappearing." Presumably, the Chancellor
had set his heart on both taxes, and being short of excuses had to make some do double duty. His other reasons for the fuel tax were certainly not impressive. Fuel. he said, cost the country a good many dollars; demand at current prices exceeded supply; there had been no increase since before the war; and rationing of commercial-vehicle fuel could not effectively restrict consumption.
None of these arguments is conclusive. Fuel has to be imported, it is true, hut the proportion that has to be drawn from the dollar area is a matter for dispute. Again, it is true that the tax had remained at 9d. per gallon since 1938, but 10 years earlier, fuel bore no tax at all. The fact that demand exceeded supply seemed irrelevant at the time of the last Budget when fuel was still on the ration, and it is unlikely that there would have been a shortage after derationing, even at the old price.
Unsound Policy It is surely an unsound policy to attempt to regulate by price the consumption of fuel by commercial vehicles. If in levying purchase tax, Sir Stafford hoped to reduce the number of commercial vehicles, this should at the same time have reduced consumption and the fuel tax would have been superfluous. As the number of commercial vehicles has continued to increase, the purchase tax has failed in its avowed object. If in these circumstances the fuel tax had restricted the use of the growing fleet of commercial vehicles (and there is no evidence that this is so) the
„ efficient operation of the vehicles would have been impaired and the "excess investment" of which Sir Stafford complained at an earlier stage would have been aggravated.
The Chancellor's arguments make sense only on the assumption that at all costs the public must be diverted from its vicious attachment to the roads and return to its glorious national heritage, the railways. There is no escaping the conclusion that the real purpose of taxing road irarisport is to force traffic on to the rail ways. When this is remembered,the motorists' apprehension about the new Budget seems only too . well founded, The experts call upon British Railways to reduce the number of stations and to close down uneconomic branch lines. There is no evidence that this advice is being followed, except in a small way. Mr. John Elliot, cliairman of the Railway Executive,. stoutly maintained the other day that there is nothing wrong. The railways, he said, carried more traffic in 1950 than in 1938, and it was unkind to call their deficiency a loss.
An increase of 10 per cent, in railway rates may mean the transfer of a good deal of traffic to the road, in spite of Mr. Elliot's optimism. As a subsidy is not to be thought of, what better way can be found Of, restor: ing the balance than another. swingeing tax on fuel? This will mean an all-round increase in transport costs, for which the public will have to pay; but the Government has a good chance of escaping blame if it argues—as it has argued in the past—that the tax saves dollars, saves vehicles, 'save fuel stations, saves joyriding by the wicked aristocracy—saves anything, in fact, except the railways. It often pays a Government to keep its hand hidden.