Taxes & Subsidies

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4.11.12

 

Fact 1 – Claims that taxes paid by public road transport produce a profit for government are untenable. Comparing the total taxation paid by all road users totally ignores & excludes the benefits in time saved by shorter journey times that are converted to money terms by the DfT to justify road building in the first place. Conversionists exploit time benefits to try to justify their claims of the benefits of conversion.

Fact 2 - Road haulage is not paying the costs that arise from its use of roads. Independent studies showed that damage to roads by lorries as compared to cars is far greater than the difference of respective tax rates. The RHA response to one report was to concede it was not paying its full costs, but not to the extent quoted in the reports – a case of pleading guilty after being caught, but hoping for a lesser penalty. (see Railway Conversion – the impractical dream, page 170).

Fact 3 – In grossing up their tax payments, the road lobby includes VAT which is totally irrelevant, since it is claimed back by transport operators or passed on to customers. Moreover, railways also pay VAT, but generally cannot claim it back from users.

Fact 4 – The road lobby excludes costs imposed on taxpayers such as treatment costs in hospitals etc. In comparing tax ‘income’ with roads expenditure, road haulage should be debited with increases in car insurance that arise from road accidents caused by haulage vehicles – there is no converse, for obvious reasons. These include deaths of motorists & their passengers, other road users, & repair to or replacement of cars, which come off worst in collisions with lorries.

Fact 5 – There is documentary evidence that slow & middle lanes are wearing out in well under the projected life span of motorways. Thus, repeated maintenance & the earlier renewal of these lanes, together with the ensuing delay costs incurred by motorists, should be debited against hauliers & bus operators.

Fact 6 – Haulage costs are kept artificially low by some in the industry due to poor maintenance & safety standards, to which insufficient enforcement is applied.

Fact 7 – PSVs enjoy overt & covert subsidies. The latter includes taxpayers funding concessionary travel, which is ignored in comparisons, whilst that paid to railways is counted in. Taxpayers fund bus shelters, raised pavements, bus lanes, bus laybys, rising bollards, etc.

Fact 8 - Conversionists claim bus & haulage services are unsubsidised, & relate road taxes to expenditure on roads. Consultants have proved that road haulage does not pay its accident costs & no national study has been made of bus costs. Taxpayers & motorists subsidise road operators.

Fact 9 - Whilst Government claimed to subsidise BR, in reality, they ‘gave’ with one hand, some of that taken - directly or indirectly - with the other. BR was, like its privately owned prede­cessors, forced by Government to subsidise industry, commuters & rural passengers through below inflation prices; & subsidise armed forces for duty & personal travel.

Fact 10 - Government gained financially by its direct & indirect interference in fares which resulted in them trailing inflation by up to 53 points (see Britains Railways – the Reality, Appendix A). Lower fares held down the Government payroll for 2.55m people: (armed forces: 0.85m, commuting civil servants: 1.01m, post office: 0.25m, health service: 0.45m, see CSO Annual Abstracts) who would otherwise have had to be paid higher wages.

Fact 11 - In March 1951, the Chancellor proposed BR be relieved of £3m pa (£50m today) armed forces concessions for Duty travel: 3.4% of revenue. The Minister of Defence blocked the proposal. (PRO: CAB). Significant gains for the Defence budget continued until 1962, when conscription ended. Under the 1883 Act, BR had to subsidise half-rate off-duty travel by military personnel & their families. Had their fares kept pace with the RPI, Government would have had to increase pay or fail to increase regular strength so as to end conscription by 1962. Armed Forces did not enjoy lower fares on buses or coaches than other passengers.

Fact 12 – Government interfered to hold down rail freight charges to help inefficient UK industry compete with imports. Government gained through taxation paid by these industries & from not paying unemployment pay to those who would be made redundant if UK companies collapsed. Churchill said in 1918 that it would pay government to own & run railways at a loss to help industry, (Times, 11.12.18). During WW2 he imposed this policy on railways, whilst road transport increased charges without let or hindrance – allowing it to build reserves to buy new vehicles after the war. In 1944, the Select Committee on Transport received many complaints from industry that ‘road haulage increases were absolutely ridiculous’. The Transport Minister threatened to slap them on the wrist, but did nothing. When Churchill resumed power in 1951, he refused to give railways freedom to determine its own fares & freight charges as it may affect UK industry. He said that railways should not be required to recover all their costs from revenue – losses were obviously inevitable.

 

See also “Railway Conversion – the impractical dream” & Britains Railways – the Reality

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