MORE MOTOR TAXES

Dominion, Volume 20, Issue 244, 12 July 1927, Page 15

MORE MOTOR TAXES

WHY NOT GET VALUE FOR THEM? A SCHEME THAT WOULD SERVE TRAFFIC " SUGGESTED TAX DISTRIBUTION (By “Spotlight.”—Copyright.) Having reviewed existing conditions in the preceding articles of this series, the writer now endeavours to discover a scheme of motor tax expenditure that would, as far as possible, give twenty shillings’ worth of value to motor tax payers for every pound of tax expended.

That the basis ou which motor tax revenue is distributed under the Main Highways Act has not given general satisfaction is apparent to anyone who reads the newspapers. It is, however, of little use to kick against the pricks unless there is a better way of doing things, and in setting out lii search of an ideal basis of distribution- it is useful to glance at how the problem has been tackled elsewhere. .. In. New Zealand British precedents carry much weight, and our Motor Vehicles Act, for instance, was largely modelled on the British measure. Britain has the greatest motor • density of any European country, but with its long-built roads and huge urban population its highway problems are remote froni our own. Some First Principles. Turning to the United States, one finds a vast body of literature on the basic principles of highway finance. Among the most valuable contributions to this highways literature are the, addresses delivered by Mr, Thos. H. MacDonald, chief of the United States Bureau of Public Roads, the organisation controlling the national highways. The first thing to do in creating a highway system, in Mr. MacDonald’s opinion, is to make a sound classification of the roads. Whether they are recognised as such, or not, there are, he points out, four classes of roads in every American State, and these classes are: First, the inter-State roads; second, the roads which are of importance to a whole State; third, the roads of county-wide importance; and, fourth, the local roads' serving only one small community. New Zealand, having no adjoining land areas, on this basis would have three classes of road. The second principle on which the head of America’s reading system bases highway policy is th?t the financing of the different classes of roads should be in accordance with the service rendered by them. Roads of national importance should be maintained by the nation; roads of district-wide importance should be maintained, by the district; and roads of local importance should be maintained by the local body''controlling the area ; n which they are. It is extremely interesting to note that in many American States there has been exactly the same dispute as in New Zealand over the relative importance of arterial roads and farm io railway station and farm to markettown roads. This has died out in America as motor-vehicle ownership has become more general. Mr. MacDonald, in various papyrs, has laid great emphasis on the point that po State can expect an adequate highway system so long as its main roads are dependent on ccunty finance. “The individual counties,” he says, “must be freed of the burden of providing for the more extensive roads which are the concern of the whole State.”

Real Service fo Mcforists.

Having created a State highway system and an organisation to control .it, the next question is the extent to which it should be improved. “The type of improvement require!,’’ says MrMacDonald, “is clearly dependent upop the traffic, and if the traffic be known the kind of surfacing or pavement to be applied, or whether to apply any surfacing at a|| will be a rela. tively simple matter to decide. , , . For any particular traffic density the economic type is that which can be paid for with the savings . in operating cost consequent on the iipprovemept. . .‘Our problem is to provide economical transportation, and in doing so we must resort to every material and every practice that can be utilised to obtain the end desired.” Distributing the Burden.

As to the basis of finance, the head of America’s road bureau takes this as liis first maxim: “That the cost of building and maintaining an adequate system of highways should be distributed in equitable relation to the benefits derived.” First and most important are the general benefits to society from good roads, such as the influences on education, recreation, health, the national defence, the postal service, living and distribution costs, In these every man shares whether he rides in a motor-car or not. Next in order are the special benefits, such as those to agriculture, manufactures, ra'lways, etc. Without roads there would be practically no agricultural development at all. Without roads there would be practically no freight for the railways and ships to- transport. The benefit of roads to property is well understood, and the benefit 'to the road user is direct and obvious. “All these benefits,” says Mr, M?i c ' Donald, ‘‘must be taken into consideration in making the assessment for the construction atid maintenance of the roads. It is not fair to lay upon one class - a part of the cost disproportionate to the benefit it receives.” Viewing tiie position as a whole, the conclusion is reached that “it is especially appropriate to devote the money raised by taxation of the road user to maintenance.” The total revenue derived from the road user, furthermore, should pot be out of proportion to the benefits derived from the direct use of the rpads. If a balance of such funds, fairly raised, remains after the maintenance requirements have been, provided for, there can be no objection to annlvitm it to construction, Where this is not the cgse construction should b? provided for from general revenue. The final conclusions reached by Mr, MacDo'i ild are :— (1) The maintenance of inter-State and State roads should be a charge against the road user. — (2) Roads serving a purely local purpose should properly be a charge against the adjacent property, which in this case is the first and often the only beneficiary. ... (3) The return to the public ip the form of economic transportation is the sole measure of the worth of road improvements. Turning to the practical side, it is found that the United States has designated as inter-State roads a senes of highways linking up all the great centres of population, and amounting to about 8 per cent, of the country’s total road mileage. Grants for construction work on these roads are paid by the Bureau of Public Roads to States which enter into a covenant to create a Highways Department and to set aside sufficient revenue to maintain

their sections of the inter-State highways in a proper manner. These grants in 1926 totalled £18,000,000, equal to 8 per cent of the national road expenditure, and came out of the general national revenue. How America Allots Its Taxes.

The collection and distribution of the motor taxation revenue rests with the States. There arc 48 of them, and each has its own ideas on the subject, A very common principle is to apply a certain percentage of the motor tax revenue to the main roads and to distribute the balance to the counties for local roads. In some'cases a percentage of the motor tax revenue is returned to the -cities, the average amount so received, however, works out at only. 8 per cent, of the total street expenditure of cities of 30,000 and_over. The motor license fees and gasoline (petrol) tax are not invariably allotted on the same basis. According to the figures of Air. Trumbower, economist to the Bureau of Public Road?, the license fees in 1925 yielded 260,000,000 dollars, and the gasoline taxes 116,000,000 dollars, making a total of 406,000,000 dollars, equivalent to 81.5 per cent, of the total ■ rural road expenditure, and working out at about £4 per motor vehicle (not including motor-cycles); The distribution of the two' taxes was as under:— GasoLicense lino fees, taxes, per per cent, centConstruction and maintenance of State highway system . 71.3 67.0 Construction and maintenance of local roads 19-5 22.0 Capital charges on State, and local highway loans 7.7 4.0 Transfers to general funds . .2 2-6 Expenses of highway departments 2— Traffic control and patrol . .3 — Use on city streets — 2.1 Other purposes 6 2.3 100.0 100.0 New Zealand conditions are most closely approximated in the Mid-West-ern agricultural States. Summarising the position in these States, Mr. J, T. Donaghey, State Highway engineer to Wisconsin, recently gave the average conditions' as foljow; Population, 2,600,000; motor-vehicles (not including motor-cycles), 600,000; motor taxation, £6 per vehicle;- total road mileage, 80,000; primary highway system, 7 per cent, of total mileage; secondary highwav system, 10 per cent, of total mileage; motor-vehicle travel, 64 per cent, on primary highway svstepi. and 36 per cent, on other roads. These latter figures were arrived at as the result of direct personal inquiry of every farmer in nine counties in Wisconsin, combined with an analysis of road traffic tallies,

Wisconsin is a Mid-Western State which has reached a very high degree of efficiency in its highway service, and its way of doing tilings is worthy of particular study- It selected the roads making up .its primary highway system op the basis of Jinking up every town of BOOQ or more inhabitants, the mileage not to exceed 5 per pent-, of the State total roads. This has since been increased to between 7 and 8 per cent, of the State total* The secondary system is selected by the counties, subject to the approval of the State Highway Department, and may not include more than 15 per cent, of tpe roads in each county.. Service to traffic is Wisconsin's motto. Its ruling principle is that every road must be maintained adequately for the traffic it carries, z -and improved as traffic warrants and funds permit. Its Highway Commission holds that a toad system about which the public cannot find its way is inefficient, and it sets aside an annual sum for erecting and maintaining direction and danger signs on all roads, livery Wisconsin motor-vehicle owner, moreover, receives free with bis annual number plates a freshly prepared map of the State highways, showing the nature of the surface op each,, and with it a booklet containing a digest of the motor laws and traffic rules. These attentions, naturally, give the motor-vehicle owner a - feeling from the start that motor taxation is payment for value received. New Zealand’s Real Highways. Turning to pur own conditions in 'the light of this survey of American practice, the first step is to determine on what principle the primary highway system should be selected. The linking up of all towns., of 2500 population arid oyer would probably get pretty close to the mark in New Zealand. In the North Island this would mean a West Coast highway linking Whangarei, Auckland. . Hamilton,. Te Kuiti, New Plymouth, Stratford, Hawera, Wanganui, Palmerston and Wellington. There would also be an East Coast highway leaving the West Coast highway at Pokeno, south of Auckland, and linking Thames, Waihi, Tauranga, Gisborne, Napier, Hastings, Papnevirke, Mastertpp, Upper Hutt and Wellington. ’, Two central highways would complete the main primary system--<>iie running from Bujls via JVJartOP. Tai' hape, and Tauinarunuj to Te Kuiti;; and the other from Napier, via Rotorua apd Cambridge to Hamilton, One centre only remains to bo Jinked. up-r Feilding, which Jias 4263 inhabitants and is adjacent to the PaJumrstqwWangajiui highway. Ip the South Island all centres reaching the 2500 limit would be linked by the highway from Blenheim to the Bluff, and from Blenheim to „ Greymouth, with a branch to 'Westport. A cross-connecting fink would probably be included in whole or part from Greymouth say, from Grey mouth to Otira and from Springfield to Christchurch. This would give us a total of about 1660 miles of primary highway in the North Island, and about 1000 miles in the South Island. As there are 40,000 miles of rural road in the Dominion the percentage of main highways would run at not quite 7 per cent, of the total mileage. In the North Island the highways named would give access to the chief scenic and holiday resorts. In the South Island they would not.. As there is a strong national interest in road access to such points as the Cold Lakes of the South Island, the Franz Josef Glacier, Hamner Springs, the Hermitage, etc., most motor vehicle owners

would desire allowance for such roads in the national system In the North Island,' Waikarcmoana, Tokaanu, etc., are omitted. If the primary system was fixed at 8 per cent, of the total roads we would reach the following position:— Total Primary Rural Roads. Highways Miles. Miles. North Island .. 22,293 1,783 • " South Island .. 18,262 1,160 Dominion ... 40,555 3,214 This would permit of the inclusion of 120 miles in the North Island to national scenic resorts, and 460 miles in the South Island. Finance For Primary Roads. It would appear, from examination of such road costs as are available that an annual expenditure of £l5O per mile should be sufficient for the maintenance and improvement of this primary system. This should suffice to cover maintenance and capital charges, and provide for fully adequate surfaces according to traffic density ou the various sections of the system. The cost of the primary system would thus work out as follows, with administrative charges at 4 per cent:— ANNUAL COST OF PRIMARY HIGHWAYS. £ 3244 miles at £l5O per mile ... 487,000 Highways Board administrative charges, say 20,000 £507,000 Assuming that the motor taxpayer is to pay for this, with, say, the present Government grant of £35,000 for use on the national tourist routes included, we find the revenue in sight running at approximately th 6 following figures: PRESENT HIGHWAYS BOARD REVENUE. £ Customs duties on tires 200,000 Motor license fees 250,000 Government grant 35,000 £485,000 This leaves a shortage of £22,000, and no allowance whatever is made for any compensation for the 3400 miles of roads pruned out of the main highways system and thrown back on to the hands of the counties. There are rumours that the intention of the Government .is to impose a tax of threepence a gallon on petrol. With no exemptions, this would yield about £563,000 on tiie basis of last year’s imports. How such a heavy addition to motor taxation, if actually proposed, would be received by motor-vehicle owners has yet to be discovered. A penny a gallon on petrol would bring in very pearly as much as the tire tax yields. As the basis for a further calculation, let us assume that a tax of 3d. a gallon is imposed and a compromise made by taking' off the tire tax- This would probably be more advantageous to motor owners than 2d. on petrol plus the tire tax. The oil ‘ companies might put the price of petrol up by 3d. a gallon if a' tax of 2d. were imposed. They probablv would pot put it up by more than 4df with a 3d. tax. The ext-'a penny in such event would t:ot be loaded with trade profits. A similar volume of taxation by tire duties would carry wholesale and retail trade profits, equal (o anvthing from 30 to 50 per cent, over the Customs receipts. 'Threepence on petrpl and duty free tires, might save the motor owners anvthing from £60,000 to £lOO.OOO annually as compared with 2d on petrol and 25 per cent, duty on tires. . Let us suppose that the tire duty is taken off and 3d, a gallon on petrol imposed and no exemptions granted. The sum reaching the Main Highways Board for distribution would then be as follows:— Motor License fees, etc,... 250,000 Petrol tax at 3d. 562.000 Government grant 35,000 £847,000 This is an 1 increase of £362,000 in motor taxation over present payments, but the net increase to the payers might be from £60,000 upwards below this figure jf the reduction in tire prices -eferred to above were realised Over all classes of motor vehicles (including cycles) it would run at about ■€•2 per annun* uer motor vehicle additional to existing taxation. Laying Out the Money. 4 The next question is how this sum of £847,000 per annum could be laid out tn give the utmost service to motor vehicle owners. An equitable and attractive basis , would probably be one on the A-mowing • lines1. Creation of a proper Highways Department to (a) supervise’ all highwavs expenditure; (bh to supervise traffic Cpntrol, devoting special attention to the reduction of the accident hazard: and (c) to provide traffic service hv signing and marking the roads, issuing comnlete road maps, digests of motor laws, etc. , 2. Maintenance and improvement of the primary road system of 3200 miles (8 per cent: of total Dominion mileage), to be made a sole charge on motor tax revenue (plus Government £35.000 grant), 3. A secondary highways system of 6000 miles (15 per cent, of each Highways District mileage), to he subsidised on a basis giving weight (a) to total road mileage in each district, and (b) to traffic "density thereon. 4. Subsidies for borough streets connecting main highways, and for roads in the vicinity of urban centres giving access to popular resorts. j.

Inspection will show that the whole of this ground might be covered on a comparatively sjmplv plan of distribution, The license fees and the Government grant could be allocated to the Highways Board for the primary system, together with the proceeds of, one pennv a gallon on petrol. The second nenny a gallon on netrol might be allotted to the Highways District Councils on a mileage basis for expenditure on the secondary highwavs, ~ , „ , The third pennv could be allotted ip proportion to the motor vehicle registration in each Hiohwavs District, One,third of this pennv might go to tjie Main Highways Board for special expenditure adiacent to urban arena One-third to the Highways District Councils. The remaining third could be allotted for the improvement of roads from urban centres which were neither main nor secondary highways but vet were freouentel by town motorists as giving access to popular resorts. How It Would Look, It now becomes interesting to see how this apportionment would work out. Here are the figuresPRIMART HIGHWAYS. Expenditure. Maintenance and improvement of 3244 miles at £l5O P-a. (This sum to be divided between N. and B. Islands, according to motor registrations.) 487,000 Administration, trama control, sign-posting the roads, issue of maps and Other motor service , 47,000 534,000 Revenue. £ License fees 2 qs'non Government grant ,c-nnn One penny per gallon on petro] .. IST.ooo Ope-tliird of Id. on petrol 02.000 534,000 SECONDARY HIGHWAYS. Expenditure. Subsidy on 6000 miles, averaging £4l 10s. per mile per ann. ... 240.000 *240,000

Revenue. £ One penny per gallon on petrol distributed to each highways district iu proportion to its total road mileage Ib7,wu One-third ot Id. per gallon distributed to each highways district lu proportion to the number ot motor vehicles registered iu it . 02,000

240,000 SPECIAL ROADS ADJACENT TO URBAN AREAS. Available for allotment according to number of motor vehicles registered in each centre. (Note —Subsidies on streets forming connections with .main highways might be paid out o£ this, and the cities and boroughs should have a voice iu the expenditure oh roads in their environs.) Yield of 1-3 of Id. per gallon on petrol .. £62,000 It will be seeu that ou the lines suggested provision is made for the distribution of about £812,000 in . motor taxation over between 9000 and 10,000 miles of roads. The present scheme distributes about £450,000 over 6600 miles, and fails to get the money where it is most needed.

In addition to the above-shown finance a grant of £200,000 a year is now paid from'the Public Works Fund into the Main Highways construction account for improvement work on the highways. It is the primary highways carrying the main volume of traffic that require most improvement, and this Government grant might reasonably be allotted, say, two-thirds for primary highways and one-third for secondary highways. Some Necessary Precautions.

It is highly undesirable that motortax revenue should be expended by local bodies without proper road plant and with no adequate engineering supervision. If these precautions are neglected there may be little to show for the money. This difficulty could be got over if the subsidies for secondary highways were paid to the District Highways Councils. Each District Council to participate should be required to appoint a district engineer, approved by the Main Highways Board, under whose direct supervision the secondary highways in the district should be maintained. This engineer mifd’t, of course, also be engineer to a-county pr group of counties in' the district. Facilities should be given for the district councils to acquire road-making plant, or, if more convenient, to contract with in-

dividual counties possessing plant to <.O work as required throughout, the district

The plan ' tentatively sketched out above needs, of. course, much closer analysis than it is possible to. give it here. Each district naturally will study it from the angle of its own special requirements. It is to be noted, however, that it is based on principles in the main which- have been tried out in the United States and found generally equitable. Its basis is service to traffic, and allotment of the funds available in proportion to traffic density on the various classes of road. That should be the foundation ■ principle of every highways scheme, and the test of every road improvement project. The whole distribution would, of course, be determined by the standard at which it was decided to maintain the primary highways. If a greater sum than shown above were desired, the proportionate allotments under the other headings would have to be reduced. x Under such a scheme as that outlined there should no longer be any necessity for local motor taxes doublebanked with national taxes.. The commitments under the Wellington Hutt Road tax scheme should be defraved out of the various portions of the national account into which the roads fall. and. the work completed out of national funds. All that Dunedin proposes to do by special tax should be done out of national funds. Christchurch’s needs should similarly be met, and there should also be available finance to carry out the .work for which Mr. Mair, engineer-- to Rangitikei Countv, has suggested a local tax in the Wanganui’ district. No doubt the rough outline sketched in above can be greatly improved upon. It will have served its purpose if it stimulates those concerned to discover a way to secure better value for motor tax monev than is delivered by the Main Highways Act as it stands on the Statute Book today. (Concluded.) (The previous srtic’is in this series appeared on June 21, 33, and’’July 53