This useful and perceptive article by Philip Johnston appeared in the Daily Telegraph last week ...
Car owners would be a lot less aggrieved if their money was actually spent on roads.
Ever since the earliest motor cars set out along the first stretch of Tarmac accompanied by a man waving a red flag, cash-strapped governments have had one overwhelming desire: to fleece the drivers. First up was David Lloyd George, who in 1909 established a Road Fund to be underpinned by taxes on vehicles. The money raised was to be devoted entirely to the upkeep and construction of roads. Indeed, Lloyd George secured support in the Commons by promising, specifically that the revenue would be hypothecated and not siphoned off by the Treasury for other spending programmes. Fat chance.
Within a few years the Treasury started to raid the fund, thereby blurring the link between what motorists paid and the roads they got in return. As with the National Insurance Fund, ostensibly set up to pay for pensions and welfare, road taxes became just another way of raising money for general expenditure. Unlike National Insurance, though, at least the pretence was acknowledged and it stopped being called the Road Fund Licence in 1936 and became Vehicle Excise Duty (VED).
Whitehall is currently engaged in yet more agonising about road financing, after David Cameron ordered a study into the feasibility of using private sector funds to maintain trunk roads and motorways. Inevitably the review is spawning ideas that have provoked howls of outrage. The latest wheeze, reported yesterday (29th October), involves a two-tier road tax – one charge that all motorists would pay to drive on local roads; and an additional one for drivers wanting to use motorways and trunk roads.
Assuming the reports are accurate, this is a daft idea on so many levels that it is hard to know where to start. For instance, what if you only have a local road licence but for some unexpected reason need to use the motorway or a trunk road: are you then to be fined? It would be possible to buy M-way top-ups for the occasions when it became necessary to use the higher-priced roads, but administering such a scheme would cost more than it raised.
There is a delicious irony behind Whitehall's search for more road cash. After all, the number of cars is rising all the time, so the money from VED should be going up commensurately. In reality revenue is forecast to stagnate or decline because drivers, at the behest of the Government, are switching to low-carbon emission vehicles which attract a lower tax. So, having encouraged people to do their bit for the environment and abandon their gas-guzzlers, the Treasury now finds the money is drying up.
However, most revenue from drivers does not come through the vehicle tax but from fuel duties and VAT. While VED raises about £6 billion a year, taxes on petrol and diesel – which are among the highest in the world – bring in nearly £40 billion. The combined revenues raised from motoring are around £45 billion a year – and yet only about £10 billion is spent on new roads and maintenance. So, when ministers claim there is not enough money to pay for the roads, it is not for want of a contribution from the motorist. However that does not stop successive governments periodically trying to force a few more eggs from the golden goose. The Treasury's problem is compounded because the greater fuel efficiency of modern engines means the take per vehicle from fuel duty is declining alongside the falling revenues from VED.
One solution, proposed yesterday in a report by the Institute of Economic Affairs (IEA), is to privatise the entire road network and charge drivers for use on a per-mile basis. The charges for driving on trunk roads and motorways would be set by a regulator, as they are in the privatised public utilities, and local roads would be maintained by their communities. The IEA says all motoring-related taxes could be removed or significantly reduced; drivers would end up paying less than they are now; and the sale would bring in £150 billion to spend on other public programmes. Private contractors would be free to raise funds to invest in the infrastructure in the way water and power companies have done.
If all this sounds fanciful, it is one of the ideas that Mr Cameron has asked the Whitehall study team to consider, because congestion and disrepair on the existing road network is costing the country £8 billion a year in lost business and delays. But what might be a rational idea to an economist sends shivers down the politician's spine, assuming he has a spine.
The most straightforward way of raising money is through pay-as-you-drive road pricing, levied through a mix of tolls and electronic car readers. People would be charged for use, with the price adjusted up or down depending on whether the car was on a motorway or a country lane. Such schemes do have their drawbacks (they are expensive to set up, for a start); but they are more sensible than a two-tier car tax. And yet road pricing was ruled out as an option even before the current review began.
Needless to say, we have been here before. In 1962 the Macmillan government set up an expert committee chaired by the transport planner R.J.Smeed. Its report, Road Pricing: The Economic and Technical Possibilities, concluded that it would be possible to charge for road usage through metering “if the government had the will to do so”. It didn't, of course, any more than it has now. The principle that guided Smeed was that “road users should pay the costs that they impose on others”. In fact, they already do; it's just that successive governments have chosen to spend the money elsewhere.
The GOS says: What he has stopped short of saying, for some reason I can't make out, is that the whole principle of charging us to use the roads is dishonest. As he says at the end, we already pay far more than the cost of maintaining the roads and building new ones. What he leaves out is the fact that these are our roads, built for us with our money.
It's all so bloody typical, isn't it? They encourage us to work and not be a drain on the state, so we do, and they take most of it in tax. They encourage us to buy our own houses, and then charge us stamp duty when we do. They encourage us to use less and less petrol, and when we do they raise the fuel duty so they don't lose out and we don't gain. They encourage our children to go to university and get a degree so they can stack the supermarket shelves nicely, and they saddle them with acres of student debt so they can milk the poor little sods for the rest of their lives.
There is an answer, of course. Civil disobedience would be easy, and very effective indeed. Let them impose this two-tier road tax. We'll just drive where we like anyway. They can't imprison the whole lot of us. There might a few martyrs, but I for one would think it a sacrifice worth making. This is not an issue affecting only a small proportion of society. We are almost all drivers, and this is our government seeking ways to oppress the entire electorate that appointed it. It's high time we put our collective foot down and told these tossers where to get off.
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Copyright © 2012 The GOS