EARMARKED FUNDS

Evening Post, Volume CXIII, Issue 103, 3 May 1932, Page 6

EARMARKED FUNDS

The Chamber of Commerce resolution protesting against the diversion of earmarked taxes is right in principle, but it does not state the whole principle, nor does it take full account of the present emergency. Earmarking of taxes is in principle unsound. 'It narrows the field of general taxation. Unless there is spec-, ial justification it is no more sound to set ■ aside petrol taxes for roads than it would be, say, to tax radio sets and gramophones to provide funds for broadcasting or a subsidy to musical societies. The user of a motor-car may be called upon to contribute to- general taxation just as

fairly as the owner of a gramophone. There is, however, a difference with Highways Funds, inasmuch as the taxation serves not merely as a source of revenue but as a*means of distributing traffic. Road-user taxation is needed so that traffic which should'go by rail^pr sea may not *be wastefully diverted to the roads because the roads are subsidised (by way of rates and grants) from general public funds. If the general taxation ! on road vehicles and motor, spirits is made too heavy and devoted to general purposes there is the risk of .driving traffic which should go on the roads on to the rail. For this reason we have emphasised, that the Government's diversion of Highways Funds has been made in the wrong way. It should be made by-re-easting the whole system of taxation: and distribution of the funds. In an emergency, a raid-Hpon any available reserves is excusable. It is better than carrying new taxation past the bearable point;'but excusable temporary measures should not be made permanent features of our taxation, system.'/