Saturday, April 28, 2012

3595.txt

date: Tue, 4 Jul 2000 12:09:13 +0100
from: "Rob Tinch" <R.TinchatXYZxyz.ac.uk>
subject: Re: [norwichgreenparty] EDP letter for checking
to: "NGP List" <norwichgreenpartyatXYZxyzoups.com>




>dear Derek
>
>Off course I am in favour of both boycotts and higher taxes, as >long as
those taxes get into transport development, not as it is at >the moment,
it dissapears into the treasury.

I'm not sure we should support a boycott which (a) is designed purely to put
pressure on the government into cutting fuel taxes and (b) will have no
impact on fuel consumption -- it's not a boycott on driving, it's a boycott
on buying fuel on a particular day. If it were a boycott on driving on a
given day, that would be different.

I follow the hypothecation argument up to a point, but I don't agree that
all transport taxes should go into transport development. For one thing,
air pollution has health consequences, so there's a strong argument for
putting some transport tax revenues into health services. Likewise, some
portion could be hived off as corresponding to global warming, and some of
that might be spent on reforestation, energy efficiency and so on. Then
there's VAT, which is payable on fuel price and duty, and it's fair enough
that that should go into the public kitty --- after all the VAT you pay on a
plumbing job or a cinema ticket doesn't get earmarked for training plumbers
or the arts. Charges which should be reinvested in transport include VED
(viewing roads as a "club good") and any congestion charging. But then
again there are strong equity arguments for taking money out of private
transport and subsidising public transport; and the suite of arguments
against road building can motivate investment of congestion charges in
projects to persuade drivers to switch to public transport (thereby
relieving congestion).

These links are there but are not clear cut: I don't think we can argue that
all transport taxes should necessarily be invested in transport, any more
than we can argue that the upper limit on transport investment should be
determined by current transport taxation (for example our proposed tram
system for Norwich would call for current investment greater than transport
taxation, in order to bring future benefits). So while some degree of
earmarking may be appropriate, and may be a popular "sweetener" for hefty
taxes, essentially the desired level of public spending on transport need
not be closely related to transport taxation.

I think the strongest argument against the current system arises from the
facts that fiscal and spending policy are largely divorced, and that the
Treasury engages in wasteful duplication of effort (shadowing work in the
other Departments), in opaque and uncooperative interactions with those
Department, and in jealous guarding of the power to vary taxes and spending
plans which essentially rules out formal hypothecation, even to the extent
of fighting hard against the idea of linking the fuel tax escalator to
environmental policy, even more so to any estimate of CO2 damage (because of
course such a tax then becomes vulnerable to updated damage estimates
suggesting the tax should be lowered).

I remember when I worked for the Transport Policy Unit a Treasury economist
introduced herself to me in a meeting and described her role rather frankly
as being "to f*ck the Department of Transport"! Something they did quite
effectively that year by scrapping new car tax without any consultation with
the DoT, incidentally binning a couple of month's work my boss had done on a
differentiated new car tax linking the tax to the fuel efficiency, which the
Treasury were fully consulted on ... anyway my point is that the reason they
could do this is that there was no link between the tax and the spending,
i.e. new car tax could be scrapped without any direct consequence for DoT
expenditure plans, despite the clear link in reality between car tax and new
car purchases, the potential relevance for transport policy, etc. If there
were some direct link between taxation and spending within individual
Departments (not necessarily a 1 to 1 link) this sort of decision would
require full consultation, and that could only be a good thing.

Well that was supposed to be a short note...sorry! Thanks for comments on
EDP letter, have sent it off.

Cheers,

Rob


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