Road tax’s ill effects

Press, 12 April 1978, Page 16

Road tax’s ill effects

By

R. W. WEBB,

a senior council member of the New Zealand Road Transport

Association and owner of a truck firm in South Canterbury.

New Zealand’s road transport industry is currently undergoing its biggest shakeup for many years. The big trucks that move around the country are the subject of an issue that is threatening to cause a major upheaval in the road transport industry. The issue is the new distance tax for heavy trucks, which started on April 1. Headlines in recent weeks have focussed on the determination of the Government to stand by the new tax system, and on the displeasure of transport operators who must put it into practice. But the effects of the new tax will ultimately be felt by everyone who is directly or indirectly affected by road transport, and that means every man, woman and child in New Zealand. The new tax is designed to earn extra money to help pay for the upkeep of New Zealand roads. More importantly, the tax is aimed at making heavy trucks, the vehicles which use the roads the most, pay their fair share. Until now the tax has been a more or less flat charge on all trucks, with some built-in penalties for heavier loads and for trucks covering longer distances. This prompted criticism that many small vehicle owners were unfairly subsidising operators of bigger vehicles, the ones that caused most road The new rules are designed to even out the imbalance. Thev are strict and uncompromising. The heavier the truck, the more it pays; the heavier the load, the more it pays; the further it goes, the more it pays. A large, heavilv-loaded truck covering big distances will suddenly be required to pay a lot more tax. Exact amounts vary from type to tvpe. but the increases are substantial. Some truck operators in this categorv face four- and five-fold increases. On the other hand small truck operators on shorter notes mav have to pay only a little more. Some have happily discovered that they will pay less.

. Across the entire road transport industry of some 100,000 heavy motor vehicles, the restructured tax will raise an extra SUM this year, at least a further SBM next year and another SBM in 1980/81. But exactly who will be paying? The answer is simple — the public. As a nonproducing service industry, transport operators must pass on the extra cost imposed on them. Transport operators have been under strict price control for the past 40 years. Every application for higher rates, whether national or regional, is carefully scrutinised bv the Ministry of Transport and is open to appeal. In this case truck operators have no choice but to pass on to the public the extra costs caused by the new tax. Moves to do this have already been made. Virtually everything carried by road under the new tax system will be more expensive as a result. Foodstuffs, general freight, building materials, coal, furniture — the list is all-inclusive. The new tax will also require higher passenger fares on buses, yet another rise which will encourage people to use their cars and add to the need for more car parks and motorways. These are the short-term prospects of the Road User Charges Act, 1977. The longterm effects will have a more telling impact on the New Zealand economy. The effects will be less spectacular at first, but if allowed to develop unchecked could cause serious problems. Under the new legislation people with anything to shift by road will find the tax burden an intolerable strain on certain types of commodities, particularly bulky and low value goods carried over long distances. Costs of stock and grain carrying. fertiliser spreading, log and wood chip carrying, coal and metal cartage and a variety of other heavy, long distance loads will rocket upwards. Nearly all are vital export commodities. Transport companies

around the country have repeatedly warned that any services rendered uneconomic by the tax will have to be withdrawn. Massive government subsidies will be needed to keep many bus operators in business. Some farmers will be unable to find a local carrier willing to truck less than full loads of sheep and cattle to the works for uneconomic rates. Valuable timber exports will be knocked back by high road-cartage bills. The new tax will require ever-increasing subsidies or relief packages from the Government to meet escalating costs. That is no welcome prospect for the taxpayer. Without adequate rural transport, farmers may have to buy and operate their own small trucks. Licensed operators will find some advantage in running smaller trucks on shorter distances, cutting out the long and unprofitable rural runs. But a transport system like this is not efficient. Fuel bills and traffic congestion will rise and overseas funds suffer as more operators seek to buy bigger fleets of smaller trucks with special axle equipment to capitalise on money-saving tax levels. Plans for regional development will be jeopardised by a shrinking road transport network. Transport costs are often the key to decisions on locating new industries, but if this is the means for attracting regional development then many small towns can forget about transportintensive industries. The new tax will simply encourage businesses to produce near major markets to cut down on transport costs. The tax-paying public should be starting now to question whether New Zealand can afford this sort of road taxation—a purist’s approach to road funding. The country has already suffered drastic cuts to its shipping and rail networks. There are ominous signs that one of its few’ remaining arteries—the road transport industry—is heading for the same fate.