PRINCIPLES NOT GRASPED

Evening Post, Volume CX, Issue 43, 19 August 1930, Page 8

PRINCIPLES NOT GRASPED

Though the House of Representatives debated the Finance Bill at length, members generally appear to have had an imperfect understanding of the principle which governs, or should govern, the re-allocation of road-user taxes. Much was made of the Withdrawal of local body subsidies hitherto paid from the Consolidated Fund and the substitution of payments from the petrol tax revenue. But to this substitution we cannot see strong objection, if the additional petrol tax is a justifiable user charge for the roads. The weakness of the proposal is that the Government has not produced evidence or argument to prove that the use of a gallon of petrol does sixpenceworth of damage to the roads—not fourpence-worth, as was estimated formerly. Until the Government can produce some reliable figures bearing on road cost and use there will always be objection to its usertaxation proposals. 'Some members suggested that the burden was being transferred to the ratepayers, and the country ratepayers in particular; but this argument will not hold, except it be allowed that motorists and country ratepayers are identical. The member who stressed this argument most could say only that farmers owned 50 per cent, of the motors and drove them longer distances than town motorists. Even if his contention were accepted, the farmer has the best of the deal, for the Highways Fund (mainly spent on country roads) is to receive 94J per cent, of the tax proceeds—not a bad return to the user who is claimed to pay 50 per cent, of it. We cannot agree, however, that 50 per cent, of the petrol is used by country road traffic. That is why we have emphasised the injustice of the present allocation —an injustice that is aggravated by the refusal .to allocate any part of the extra 2d (except their share of the former Consolidated Fund subsidies) to the cities. But the principle which members failed to grasp is that it is essential to adopt a new method of road finance. It is true that all sections of the community benefit from good roads, and this would seem to support Mr. Savage's contention that "the whole of the roading costs should be provided by the Consolidated Fund, to which every person should contribute according to their means." It is necessary to adopt the user-payment principle so that transport may be distributed between road, rail, and sea, according to the most economical method. If a large part of ihe road cost is hidden (by a levy on either rates or taxes) the distribution will be lopsided. It will be lopsided, too, if the unequal allocation of road

revenue is maintained. We are pleased to note that some Reform members (though a Reform Government instituted the present iniquitous system) protested against further injustice to the towns, and that this protest was heard also from the Labour benches. The arguments seem at last to have penetrated to the Government's understanding. The Minister of Lands said:

Whether tho cities should receive any more or not was a question that could bo investigated more satisfactorily after a full year's working.

He added that the cities were being very generously treated in subsidies for relief works; but this surely is a weak argument. Relief work subsidies do not aid the general city revenue. Indeed they are payable only when the cities are adding to their burdens. The Prime Minister finally stated his intention

to submit the question of the Highways Funds to the Public Accounts Committee, and go into the question of whether the present system of highways taxation, with all the claims which are being made that the moneys belong to certain people, can be put on a more satisfactory basis. It is something to have a promise of investigation, but the inquiry will not be complete and satisfactory unless it extends to the factors governing road use and road cost.