Thursday, 27 December 2012

"Car pollution, noise and accidents cost every EU citizen £600 a year'"

Emailed in by David C, from The Guardian:

The perennial complaint from drivers that they are excessively taxed has been challenged by a study which concludes that road accidents, pollution and noise connected to cars costs every EU citizen more than £600 a year.

The report by transport academics at the Dresden Technical University in Germany calculated that even with drivers' insurance contributions discounted these factors amounted to an annual total of €373bn (£303bn) across the 27 EU member states, or around 3% of the bloc's entire yearly GDP. This breaks down as €750 per man, woman and child...(1)

The study, The True Costs of Automobility, accepts that such calculations necessarily have an element of approximation but give an important overall picture. In a national breakdown it says UK drivers accounted for £48bn of costs, second only to Germany, or about £815 per person per year.(2)

The figures deliberately do not offset motoring-connected taxes unless they are specifically ringfenced for car use, for example a motorway toll where the money is set aside for highway maintenance. The authors argue that other motoring levies form part of the general tax pot and are no more reserved for the impact of cars than alcohol duties are reserved for healthcare or policing drink-fuelled disorder.(3)

Even if motoring taxes were taken into account there remains a significant shortfall in the UK. Fuel duty and its associated VAT along with vehicle excise duty contribute around £38bn a year to the Treasury's coffers, £10bn less than the estimated cost.(4)

1) OK, let's call it £600 each.

2) Or £815 each for the UK, which gives us a total cost of a nice round £50 billion. The report appears to exclude the cost of building and maintaining roads, which is no more than £10 billion a year in the UK, so let's call it £60 billion all in.

3) What is the relevance of this? The government has to get money from somewhere, so the taxes it collects from motorists (minus direct costs) either reduce the amount of tax which non-motorists have to pay or are spent on stuff which benefits non-motorists.

UPDATE: as David C himself puts it in the comments: "...according to EU Greenie Logic, motoring can never cover its external costs, because whatever tax revenue it contributes to society is either hypothecated and doesn't count or non-hypothecated and doesn't count. QED!"

4) But "fuel duty and associated VAT" are not the end of the story. There's also VAT on new cars, car repairs and car parts; road fund licence; insurance premium tax; the P11D scale charges way in excess of the actual cash cost or value; parking charges; parking and speeding fines. It all adds up to rather more than £50 billion a year, if we include all the other taxes which car manufacturers, repair workshops etc pay then we are well over £60 billion. So as a matter of fact, the taxes cover the costs.
The wider points are the more blindingly obvious ones:

5) As a matter of fact, most households in the UK own at least one car, so each household is simultaneously causing and suffering approx. 1/27 millionth of these external costs, so is breaking even, give or take a couple of hundred quid a year.

6) We can guesstimate the external costs of motoring, but what about the external benefits? For sure, we used to somehow manage without private cars and lorries, and if this country had a massive horse-breeding and railway building programme (the costs of which I can't even be bothered to guesstimate), we might just about manage again, but what would the impact be on GDP?

Allow me to guesstimate somewhere in the region of fifteen per cent, so motoring brings an external benefit of £200 billion per year. As well as the pleasure from simply owning and driving your own car, go where you like when you like in a comfy seat with your own choice of music etc.

7) Of course, the bulk of these external benefits accrue to motorists themselves (more jobs to choose from, or, for a given workplace, a far wider choice of places to live within commuting distance; more shopping and leisure opportunities), but these benefits still spill over to non-motorists (i.e. they buy stuff in the shops which was delivered by lorry, their rubbish gets taken away by lorry, relatives with cars come and visit them more often than if they had to walk there).

So by definition, the average household is considerably better off (a share of £200 billion benefit; the external costs and the tax net off to zilch on both sides), even those households who bear more than their "fair" share of the external costs are benefitting from some share of that extra GDP and £50 billion tax paid and must be at least breaking even.
As ever, they bung in some land value points towards the end:

" must be stated that car traffic in the EU is highly subsidised by other people and other regions (7) and will be by future generations: residents along an arterial road,(8) taxpayers, elderly people who do not own cars,(9) neighbouring countries,(10) and children,(11) grandchildren and all future generations subsidise today's traffic."

8) Woo hoo! What 'other regions'? As far as I am aware, 'other regions' i.e. oil producing countries make a pretty penny out of our motoring habits as this boost the value of their land (the oil under it).

9) Yes, house prices and rents are lower along arterial roads, but you get a discount when you buy it; there's your compensation. By the same token, house prices in outlying commuter villages or industrial estates are higher. If the price of fuel doubled overnight, then the value of homes (and business premises) in inner suburbs would go up and values in outlying commuter villages and industrial estates would fall. Land Value Tax would be an automatic compensating mechanism, whatever happened to fuel prices.

10) Poor Widows Without Cars. Presumably In Mansions.

11) Repetition.

13) Yes, but children benefit if their parents go to work, and most people go to work by car. And children like being ferried around by car. As harsh as this sounds and without wishing to make light of individual tragedy, if ten million children can benefit by having parents with a job and being ferried around and a couple of thousand are killed or injured every year, that's still an overall benefit to "children".


Bill Quango MP said...

Great stuff. it all comes out in the wash.
Merry Christmas to you.

Mark Wadsworth said...

BQ, thanks, and excellent summary. The more times you wash it, the more comes out.

Lola said...

Excellent piece of fisking.

I find all these 'official lies' mightily wearying.

Robin Smith said...

All tech improves productive power.

The problem is, only the landowner gets the gain from it.

Costs of living for everyone else rise in proportion.

That's all that needs to be said.

DavidECooper said...

The report is far worse than Mark realizes.

My understanding of the report was that they make the reasonable point that “hypothecated” fees paid by motorists, i.e. fees earmarked for specific purposes (for example a toll used for maintaining a bridge) cannot be counted as a contribution against external costs such as environmental or health impacts, since it is already earmarked.

They then argue that “non-hypothecated” fees paid by motorists, i.e. those that that go into the general tax revenue, cannot be offset against external costs either. They justify this on the grounds that such money is used to “grant services to the general public; consequently it cannot be used to offset external costs” (see page 7 of report)

Thus according to EU Greenie Logic, motoring can never cover its external costs, because whatever tax revenue it contributes to society is either hypothecated and doesn't count or non-hypothecated and doesn't count. QED!

A K Haart said...

Excellent - where would we be without bloggers?

I see the study was commissioned by the Green group in the European parliament.

Mark Wadsworth said...

L, ta.

RS, well obviously most gains are thusly swallowed up, but that's still no reason to shun technology.

DEC, well put, I have updated the post.

AKH, ta, yes. Two names to strike fear into our hearts. And to provide raw material for bloggers.