Wednesday 26 May 2010

On the road again

I'll probably be thinking about fuel duties, and how they ain't such a bad tax either...

My latest blogpost: On the road againTweet this! Posted by Mark Wadsworth at 07:41

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22 comments:

Robin Smith said...

Good plan. Motoring is a heavily subsidised/socialised activity

26 May 2010 at 08:08
Tim Almond said...

It's not subsidised, Robin. People pay for above the costs.

We do need some form of pricing to manage demand of the road system, though. For some reason, people grasp that there's a good reason why cinemas, trains, airlines, holiday companies, flowers, car parks, bars and restaurants charge different prices based on periods of peak demand, yet if you suggest it with roads then it's an outrage.

26 May 2010 at 14:03
Mark Wadsworth said...

RS, it's cash positive. Whether fuel duties are set at the revenue maximising rate is another topic.

JT, in theory, road pricing is a jolly good idea, but the practicalities of collecting such tiny amounts of money probably outweigh benefits.

What particularly annoys me is Dartford Bridge/Tunnel, which is £1.50 at weekends (perfectly fair price) but you are in the queue for ten minutes. The value/cost of time and petrol you waste in the queue is probably more than the £1.50.

Further, even without road pricing, if you take a congested road at peak time, you are using more fuel (and losing more time) so you are paying more.

26 May 2010 at 14:07
dearieme said...

Whenever I find an American blog discussing VAT, I suggest that they bin the idea and just stuff lots of tax on transport fuels instead. This routine sally is never engaged with at all. It would seem to be unthinkable.

26 May 2010 at 15:28
Mark Wadsworth said...

D, agreed. VAT is worst tax of all, fuel duties aren't do bad (they are actually a 'road use tax').

26 May 2010 at 15:33
Tim Almond said...

MW,

I'd personally get rid of the Dartford crossing charges for that reason - they slow down the flow of traffic. Work out the remaining cost and carve it up so that the local counties pays a little more than the rest of the country per head, pay off what's left of the cost of it and travel free.

I'd leave the Severn crossing as is, though. Getting across to Wales is hardly strategically important unless you want to visit government departments or watch your holiday cottage getting burnt down.

26 May 2010 at 16:08
Mark Wadsworth said...

JT, correct. If Bluewater and Lakeside totted up what their delivery drivers, employees and customers paid (in cash and in lost time) in a year, they'd probably find it beneficial to pay for the cost of the bridge and tunnel themselves. Or do it with LVT, of course...

26 May 2010 at 16:14
bayard said...

"I'd leave the Severn crossing as is, though. Getting across to Wales is hardly strategically important unless you want to visit government departments or watch your holiday cottage getting burnt down."

I'd hazard a guess and say you lived in South East England. Me, I don't give a shit about the Dartford crossing, 'cos I live in Wales but I think that the Severn Bridges should at least be managed by different companies in competition with each other and, in the grand scheme of things, my opinion is as important as yours.

26 May 2010 at 17:31
Tim Almond said...

bayard,

I'm actually in the South West and I have more reasons to travel to Wales than Dartford.

I worked in Cardiff once and travelled across the new and old crossings and rarely experienced much traffic.

My point was more about toll roads and throughput of traffic, which having been through the Dartford Tunnel once was terrible.

I don't have a London bias, but there's a huge number of people in the M25 area and it's difficult to get anything across the short channel crossing without using the M25. I'd like to see a couple of motorways linking Kent with the M1 and the M4, which go past London, but there's not a chance at the moment.

You're quite right about the bridges. It would also be nice if they joined the 21st century and took credit cards too.

26 May 2010 at 18:34
bayard said...

JT Point taken. Sorry to accuse you of parochialism. I've never used the Dartford crossing AFAICR, but I'd agree with you about the lack of hold-ups at the Severn.

26 May 2010 at 22:15
Robin Smith said...

Joseph Takagi

If people do pay for above the costs can you tell me what are:

1) the costs
2) what do people pay

MW: Ditto

I keep asking ?

26 May 2010 at 23:15
Tim Almond said...

Robin,

Taxpayer's Alliance Figures from 2007/8 (http://www.taxpayersalliance.com/transportspending.pdf):-

Road spending: £8.3bn
Fuel Duty and Vehicle Excise Duty: £30.3bn

Even if you take out the climate change costs (of 3.54bn), You've still got a gap of around £18bn.

The costs/payments that I have are as follows (but they're from a lobbyist so don't know how right they are):-

Total road spending:

27 May 2010 at 01:07
Mark Wadsworth said...

Robin, total taxes on cars (VAT, fuel duty, licence, company car taxation) is about £40 billion. The entire budget of Dept of Transport is about £20 billion.

27 May 2010 at 07:26
bayard said...

"total taxes on cars (VAT, fuel duty, licence, company car taxation) is about £40 billion."

You cannot count VAT as it is a general tax and company car taxation is a form of income tax, like taxation of other benefits and payment in kind.

"The entire budget of Dept of Transport is about £20 billion."

What about what the local authorities spend on roads?

27 May 2010 at 12:09
Mark Wadsworth said...

B, OK, strip out VAT if you like, but a tax is a tax, surely? And how is VAT on petrol any different from fuel duty?

JT, ta for workings. I thought it'd be next to nothing. I don't see why you exclude bus subsidies, bus passengers are road users like anybody else (so is it an expense or negative income?), and from a car driver's point of view, more people on buses = less people in cars, so it's all good.

27 May 2010 at 18:38
bayard said...

JT, Pembs County Council spent £19M on Roads and transport last financial year, so I guess rural LAs spend more. If we take those as two extremes, the average would be about £11M, giving a total spend of £4.7B. Given that the vast majority of the nations roads are built and maintained by the LA's, I suspect that much of the DfT's budget goes on something else.

"B, OK, strip out VAT if you like, but a tax is a tax, surely? And how is VAT on petrol any different from fuel duty?"

VAT is levied on almost everything. Fuel duty is only levied on fuel that is used by motorists. If I have a tractor, or a diesel generator, I pay no duty on the fuel for it.

27 May 2010 at 19:44
Mark Wadsworth said...

B, OK, let's call it £10 billion for roads, which sort of supports JT's and my view.

By the way, I don't have a problem with 'the state' making a profit on fuel duty minus roads minus public transport subsidies, it's like mobile Land Value Tax. But let's be honest about the figures.

"VAT is levied on almost everything"

Nope. Notwithstanding that 99% of fuel is bought by motorists anyway, it is levied mainly on the productive economy, and most things that are land- or finance-related are exempt or even zero rated. That's why house price and credit bubbles are particularly extreme in this country. Another reason why VAT is The Worst Tax.

27 May 2010 at 19:52
Tim Almond said...

Mark

JT, ta for workings. I thought it'd be next to nothing. I don't see why you exclude bus subsidies, bus passengers are road users like anybody else (so is it an expense or negative income?), and from a car driver's point of view, more people on buses = less people in cars, so it's all good.

I would only exclude them because we were talking specifically car user price vs car user value, and I was qualifying it.

I'm not sure about bus subsidies. The busy routes pay for themselves anyway. The ones around here that are subsidised are going out to villages carrying 3 or 4 people.

But I quite like cycle lanes for that reason. People don't like riding in traffic, but widen a footpath and they'll get on their bike and you reduce congestion.

27 May 2010 at 20:14
Mark Wadsworth said...

JT, fair point, but I was splitting hairs really. Our point was that the government makes a big profit on fuel duty minus cost of roads. What is spends that profit on is quite a separate issue.

27 May 2010 at 21:59
Robin Smith said...

Dear All,

Are you all accountants? Externalising all the things that do not add up to zero? Or things that have a moral dimension?

What about the cost of congestion, especially to people who do not get the subsidy

What about the cost of the lost production from the disease caused by pollution and noise

What about the cost of the lost production from the death and injury caused by road kill

Joseph mentions climate change costs. But this is a denial forum. That is zero cost then? Else how did you calculate that cost ? Make your minds up time!

Or are your saying that motoring provides a social service for everyone else. I thought that was anathema to this forum ? Ditto

Free parking ? Nice subsidy.

Tchh! You guys!

PS see more here, still unanswered with coherence on another thread

PUMP UP THE DEBATE TO STOP MOTORIST FUEL HYSTERIA

28 May 2010 at 08:37
Tim Almond said...

Robin,

Joseph mentions climate change costs. But this is a denial forum. That is zero cost then? Else how did you calculate that cost ? Make your minds up time!

The numbers are based on Lord Stern's figures for the external cost of CO2. Which IIRC are biased towards the worse of the IPCC models.

When I approach an issue, I don't like wasting time. I'd much rather throw everything in that people can think of on the other side and still be able to show that something is true than have to waste time.

It's frequently why I'll use Stern's figures in debates with watermelons rather than debating whether Stern's figures are biased or whether the science they're based on are shaky. Because even if you accept the 2 worst case models of predicted levels of global warming,
raising the price of vehicle fuel is not a good thing to do economically.

28 May 2010 at 11:02
Robin Smith said...

@ Joseph, point taken.

I await other numbers on the real costs of motoring in anticipation.

28 May 2010 at 11:19

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