Off the Track
Page 70
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pUZZLED and a little angry, a correspondent wishes to have verified or refuted the claim recently made to him by a railway representative that, if the railways were given their permanent way for nothing, and in return paid a tax on fuel at the same rate as road users, they would be several million pounds better off. There may well seem reason for concern if the claim is true. Road users have maintained that a tax of 2s. 6d. a gallon is excessive. Their protests may receive less attention when it is learned that even the penurious railways consider the tax light and would welcome its application to themselves. If they thereby saved a lot of money, this would not only help to reduce their annual losses—and road users do not necessarily object to this, as the Government may have to write the losses off in any case—but would also encourage them in a policy of rate-cutting.
The railways are skilful at putting an idea across. This apparently reasonable suggestion that roads and railway track should be treated on the same basis has been put forward recently in learned papers, in Parliament, in the Press and at meetings sponsored by trade and industry. Because it appears to echo what some independent experts have been saying for a long time on the subject of equalization of track costs, the public are at !east prepared to give the idea a hearing, and are partly disposed to believe it.
The best exposition is to be found in the paper on "Economics of Transport" read a few weeks ago at the British Association meeting by Sir Reginald Wilson, a member of the British Transport Commission. He gives a figure of £70m. a year for the railways' net gain if they paid the sams fuel duty as road transport in place of the "track cost now put upon them." . In his calculations Sir Reginald includes steam and electric power "at their oil equivalent." It is not true, he concludes, that road competitors are unfairly treated in that they pay fuel duty. "On the contrary, they get their track at something like half the cost borne by the railways—a surprising conclusion in the light of current propaganda on the subject."
Appearance of Strength This is carrying the war into the enemy's country. Sir Reginald's argument is, if not strengthened, at least given an appearance of strength by the fact that his calculations are impeccable. It seems almost a pity to have to point out that they prove nothing.
What is the present situation? According to the latest edition of the British Road Federation's excellent "Basic Road Statistics," .033m. was spent on the roads by the Government and by local authorities during 1958, whilst road users paid £564m. in fuel tax, vehicle and licence duties, and purchase tax. Another way of putting it is that the Treasury receive four times as much from the use of the roads as they and the local authorities pay out on building and maintenance. The taxpayer is getting a good bargain; and so great is the discrepancy between revenue and expenditure that road users are able, without appearing inconsistent, to claim on the one hand that they are taxed too severely, and on the other that there should be more money for roads.
In comparison, the railway's are lucky. They have no tax to pay on the fuel they use, whether or not it is the same type of fuel that drives road vehicles, and other financial concessions are made to them. While free from all special taxation, they are still causing the taxpayer concern by c32 their inability to make ends meet. Each year their liability to the Exchequer increases by a figure far in excess of the total national and local expenditure on the roads.
Road users might well wish that, like the railways, they were allowed to take over and finance the road-building programme, if in return they were relieved of taxation. This may not be practicable, but is a plausible extension of the existing position. There is a widely held, although not universal, assumption that the cost of the roads should in some way be shared among the users. A convenient instrument for collecting the money is to hand in the fuel tax. This ensures in a rough-and-ready way that the amount paid bears some relation to the amount of use. There are some inequalities. For example, the operator of diesel-engined vehicles gets more m.p.g. than if he were using petrol, and to that extent may be regarded as undertaxed. 40But on the whole there are few complaints about the incidence, as apart from the volume, of the tax.
Fixed in Their Minds Although since the abolition of the Road Fund there is no official connection between road taxation and road expenditure, it is reasonably certain that the Government Departments concerned have the relationship firmly fixed in their minds. At any rate—to take an extreme case— should some new means of propulsion replace oil, it would soon be taxed; and, to go even further, if the new fuel cost hardly anything and lasted almost indefinitely, the Government would at once find, and would try to apply, another means of getting from road users at least as much money as the fuel tax yielded previously.
Continuing the fantasy, let us suppose—although it is highly unlikely—that the Government actually decided to meet railway track costs and recoup themselves from the B.T.C. The method of raising the money would certainly not be a tax on fuel. The railways use several kinds of fuel, some of them indigenous, so that it might be found inconvenient to collect taxes on such a miscellaneous assortment. Moreover, as Sir Reginald implies, the railWays' fuel constmption is much less than that of the road user, and the track cost per route mile three times as great, so that the rate of taxation would have to be very high, between 6s. and 7s. a gallon.
The difference between this figure and the road users' half crown highlights the absurdity of Sir Reginald's argument. He is naturally entitled to point out the difference between road and rail costs, but he cannot then draw conclusions on the assumption that there is no difference. The problem of track costs is complicated enough without
• Sir Reginald suggesting they should be met by a fixed rate of tax on another item of costs. It would be just as sensible to say that the price of a house should vary• according to the number of people living in it. The builder would not listen politely to reasoning along these lines. In the same way, the taxpayer knows that he gets more from road users than be pays for the roads, and he would no doubt hope—even if he did not expect—to be paid on the same basis by the railways if it came to the point. That is the beginning and the end of the matter. The intention of tfie B.T.C. may be to confuse the issue. If so, road operators should refuse to be shunted into a siding. Their case remains as good as ever. They give money for much less than value, and the railways should think themselves lucky in continuing to avoid the extremely heavy burden of*taxation that fails on their competitors.