PETROL TAXATION

Evening Post, Volume CXXIV, Issue 57, 4 September 1937, Page 13

PETROL TAXATION

NO CHANGE THIS YEAR

MOTORISTS MEET MR. NASH

A COMPREHENSIVE CASE

-4 definite pfoflouncefteiit that the 4frf t&x on petrol would not b% interfered with this yeftr was given by the Minister of Finance (the Hon. W. Nash) yesterday afternoon to a deputation representiftg ffidtoristS' lfltere'Ms, which sdOghf as its main objective the aboUtidffdf .thil tax in f^d<Mptiafi of a promise claimed to have been gIVDn ftitne tittle ofitS JmpQsUidh. The deputation was a latge otfte, representing, according to 6fie jpeakef, tOjOOO dtganisfcd filotorisis, and in presenting a eoittpifeheiiSiveease to the Minister it asked also that the 6d per gallon assigned to'the Maiii Highways Board should be for its exclusive use;. ,The.Minister pfdifligedih regard to the other matters that he woiild givei than his close ednsideratiofl, and that before taking any Action ih regard to th 6 iiMJideilce of nfirtor taxation he would consult the motoring interests, :

The deputation' Was headed by; Dr, E. E, Porfitt, president of the North Island Motor* Union, arid it was1 introduced to the MifiiSter of Finance, With whom was the Minister; of ftarifip'Oft (the Hon. ft S&nple), by Mr* ft McKeen, M.IV , . : Dr. Porritt briefly SUmniarised the! object of the deputation, aM fisk'ed Mr. G. W. HutchiSdn, secretary df the1 Automobile Association (Auckland), to present the deputation's arguments; Mr. ftutfchlsSii said that they wets all anxious to take back to the" annual meetings of motorists throUJfhdUt the DomiriFdti tlift reply Oi the Minister to their representation's; He MA that when the 4jd tax Was ,iffiposed a definite: .uhd«taKiii£ Was given that when the" national flflances improved it would be takifl off. "The time has come, it is submitted," said the speaker* "for that promise to be re'deemedi Motorists in the pejst have played the game, and we wahj to feel thai the fairness they have shown in their dealings With the various Mm* istefs* will be met with fairness."

He went on to say that it might be felt that motorists could affdfd td pay this ta"*" because 6f the increased fegis-. tratldfls/ but Me wanted to point out that thdge Increases \Vefg merely mak? ing up leewayv. f iirthermore, the cost of fliotdr transport was bound up with the cost of living, and a reduction on motor taxation would spread a general alleviation in costs, as it would result in.reduced transport costs arid ifi tiirh a reduction in the cost of commodities.

Mr. Hutchison said that for mariy years it had been obvious to th6s£ motorists who had had knowledge of tHe" is6siti6n that ni6tof-vehicle owners had bbfne an unfairly heavy proportion of the taxation burden. "It is respectfully submitted this is ..completely established ■in the accompanying statement. T"he opportunity is! takefi, td6, td express the views- r of -the m&tor iiiiidflS towards other : pYojppSals ptit forward which relat§ td, ; thjp ftiajdr matters of ftWtdir taxation md < highways, finance. Specific questions whidh have received our. attention inehide th* following:-^ ■ ■ ,- V; ■■■;

1. Does motor taxation under existing JhactaeiitS:- equitably distribute anlotig mdtdrists, iocai body ratepXyeW, arid general taxpayers the liability for general State and epeeiflc puffjoses? V ';- 2. Should the revenue from motor taxation be employed directly for the advantage of the section of the community providing it? 3. Should the proposal to abandon the Main Highways Account and to j place all motor' taxation receipts to the credit of the Consolidated Fund j be agreed to? 4. Should all motor taxation be I grouped under one head, thereby simplifying its collection? . ! "In 1934 the Transport Co-ordination' Board, acting under direction from the Minister of Transport, conducted an inquiry into the taxation of motor transpbrV said Mr. Hutchison. "The report of the board has been used as the basis for the preparation of th§ historical summary of the subject in the statement now submitted, UNIONS' VIEWS. "The conception of the Unions of what the motorists' responsibility ■ for" taxation should be based On Slay" be broadly summarised as follows!-^-1 1. That there is a responsibility to contribute to general State revenue through Customs duties on itnports of motor vehicles and parts, etc; according to their utility. 2. That the growth oi feffieient transport should be facilitated; and because of its proved economic value road transport should be developed by: (a) The improvement and maintenance of roads at satisfactory standards of efficiency and safety; and by (b) the use of road transport facilities. 3. That the cost of the provision of such facilities should be borne: (a) By the State itt accordance With its responsibility to provide ways and means of land travel for Use by its citUtehai afid fdr defence purposes; (b) by ratepayers whose lands are given valtlfe as increased value by communication facilities; and (c) by other f dad Users according to the extra improvements or standards demanded for theii? use. "It ii respectfully submitted that motdflsts have Shown themselves, by the contribution of a high petrol tax for reading purposed, as being prepared td bear their part of the liability involved jil providing for their requirements in transport facilities. The existing bases of taxation affecting motorists as a.claSs go fllUCh further, than this, however* for we" find that their contributions to the geftefaV revenue funds of thft State ptit them in the Uhfortun«t« position tit bearing a share of liability which should fall on the shoutderl of the general body of taxpayer*. "We submit there IS no justification for th« assumption that motor vehicles and tAQtot requisites are luxuries, and should be tasted acedrdingiy* or that mdtof dwfterg are financially more conveniently able to meet the high taxap tiori Imposts than ether .members of the or that a tax bta. motorists is passed on to consumers of their services, and therefore equitably distributed; and/or that the ownership, of motor vehicles is not So wide that taxation resulting from such ownership is effectively distributed among the community. A MODERN NECESSITY". "Motor transport is so much a necessity of modern life that the content tion that motor vehicles are to be regarded as luxuries can no longer, be taken seriously. As such an essem tial element in the conduct of our activities its tax contribution should be in keeping' with its Utility. "It may be argued that the huge increase in the number of motor vehicles registered during the past two years is ft> clear indication that the taxation burden is hot redacting to the detriment Of the development of road transport. For the six years frdm 1930 the registrations (all but a Smnll number belflg first registrations) fell far short of the number of 1930. There is no doubt that the extraordinary

iiuisber of new Vehicles imported recently is" itt the main the direct result of an effort by New Zealanders td overcame their inability to keep up to date in their road traffic".facilities* However, even assuming that we are iiot&i the point where the law of diniinlsniiig returns operates in relation, to both motor vehicles and petrol, we Consider that is, no reason Why; mdtoris'ts as/ a class should be more heavily. tdxed than any other section (if. citiJSens."

Mr. Hutchison submitted a lengthy Stateriien't covering the period from i&aß t& the present This, he said, revealed; (1) The huge increase in the yield of motor taxation. (2) That the increase ,in the yield Was ftot accounted for entirely by the greater number of* vehicles—motor taxation reached a record high level in both .total revenue and average per vehicle iii 1937. (3) The extent to which taxation contributions of motorists as such were used for general purposes. (4) That whereas in 1931 33 per cent, of this revenue Was so used the percentage iii 1935 was 65. (5) That although the aggregate yield for motor taxation and the tax per vehicle had increased* the advantage had been erH joyed by the Ctinsoiidated Fund and not by the Highways fund. Mr.- Hutchison presented recommendations for the Minister's consideration:— PETROL TAX. "In view; of the importance of motor transport in our economic and social system," he said, "dUr recommendations ar'e-Jf-,, " ' . 1. That the levy of 4Jd per gallon .. fof general purposes be abandoned. '2. That -the (3d per gallon assigned .to the Main; Highways Board be for ■ ,lts exclusive uSe in roadirig purposes, " and' hot: for fbandn^ rebates and I the lik^ to Sections of the community, or for-meeting charges which should ■b€< bpfiie by- the ddmmunity as a : 'wteife.'" ■■-■■ '/. '..... .■ " : "Cdficerniflg" the first recommendatii3ii attentidii •is drawn td the Underhiehtidh'ed matters: 1.; Petrol already bears a high rate ;. of; tax .ipt Specific purposes, of national benefit, thereby putting its consumers in the position Of meeting their; obligations to th# State in this .respect tJsers of petrdi as Such should not, therefore, in addition have to pay a further levy for general purposes. 2. The principle of granting preference to fiommodities useful in economic development is already adopted as iii the case of machinery imports for instance. 3. Motor vehicle owners afe called upon to meet their share of local and State taxes* along with other citizens, with the result that the existing duty on petrol for general purposes imposes dofible taxation on this section of the community. "Concerning the second recommendation, it is desired to emphasise that When the petrol tax was first introduced it Was to be applied for road' in# p urpijses. The motorists assisted the Country at a time of national emerpney by agreeing to £500,000 per an' HUm from the Highways Board being Used fdr genetal revenue requirements. ENJOYING PROSPERITY; ' "When the petfbl tax was applied for other than highways purposes* the Government gave . its assurance that when the financial stringency eased such emergency measures would be abandoned. There is an abundance of evidence that the present Government is satisfied that we are again enjoying economic prosperity. In view of theSe assurances no apology is* made for asking now fdr taxation adjustments, which we have been given to believe we WOuld get,when the taxation was first imposed. ' "fot some time past until this year (an announcement has been made of its discontinuance) rebates on county rates have been a charge against motor taxation. It. is not for us to Say Whether or not Such rebates should be granted, but if they are granted it is more a matter for the general Community than motorists to meet the financial commitments. "In the United States where the federal Government makes allocations to the various States frdm revenues derived from taxes for specific roading purpdses, those States using highway fiiiid3 for dther UseS are penalised under the Hayden^Cartwright Act of 1934. ' Drivers' licences. "Proposals for amending the Motdr Vehicles Act so as to change the law relating to motor-drivers' licences have received out consideration. It is recommended in connection with the costs of licences that 5s be the charge for the first licence; but that the cost of subsequent renewals be 2s 6d, on the grounds that whereas a certain amount of work is involved in connection with the first licence, its renewal will apparently involve little wore than the sighting of & current dr previous, licence by a postal dfncer and filling in,the name and date on a new one. ' HEAVY TRAFFIC FfiES. "The expressed opinion of the motor Unions that heavy, traffic fees are justified by the failure of the petrol tax to meet the additional construction and maintenance costs of roads due to their use by heavy vehicles is fully supported by the opinions of county engineers and the Main Highways Board. "We recommend that the principle of dharging heavy traffic fees be re« affirmed, and that the collection Of them be undertaken on a national basis, the proceeds being paid to the Main Highways Board for subsequent allocation to its own revenue fund and to local authorities oh a basis to be determined between them. CERTIFICATION OF FITNESS. "It ie recommended that if the inSpectiohg 6f motor-vehicles called fdf in connection With the issue of certificates of fttrtess are carried out by the Transport Department and traffic departments of city councils, the funds necessary be provided from the' proceeds of existing motor taxation. . "We recommend that an investigation be made into the iresonableness or

otherwise of amounts paid to the Post Office for services in connection with registration and licensing of motor vehicles, including the issue of number plates. HIGHWAYS BOARD FUNDS. "We recommend that amounts for interest and amortisation4 relating to the roading debt in New Zealand be not charges against funds provided by motor taxation. The effect of such action has the extraordinary result of making motorists responsible for the State's duty to provide such means of communication. It surely cannot be seriously suggested that motorists Should accept the liability for roading expenditure of past years in this manner. t "Another matter which, in our opu> ion, calls for correction is,, the debiting of aft amount of £61,300 per annum to the Highways Revenue Account for in* tereston grants made to the Main Highways Board towards the State's shftfe of providing for the construction of modern highways. These grants we>e discontinued in the period of financial stringency and the Government decided that the grants should bear interest. "The motor unions have alternative recommendations concerning this matter as under:—'(l) Either that the annual charge ot £61,300 be discontinued: (2) or that ah amount of £1,532,500 (the annual Charge capitalised at 4 per cent) be given to the Highways Board to assist ih overcoming ' the Obsolescence of existing highways and to justify the annual charge. ALLOCATION OP IIEVENUE. "A principle of which we desire to reaffirm our approval affecting the operations of the Main Highways Board is the appropriation Of/taxation for Special purposes, in lieU of paying the yield to'the Consolidated Fund and having the necessary allocations made from there by Parliament. From time to time Some have adopted the attitude that the policy should be abandoned. "The main objection to the Specific allocation of 8 the proceeds of motor taxation to the Main Highways Fund appears to be that Parliament is fobbed of its prerogative in deciding how public revenue should be spent. It is considered that the objection referred to is entirely disposed of by Section 3 of the Main Highways Amendment Act, 1936, which provides that 'no Work Of construction in felation to a main highway shall be commenced . . . except with the precedent consent of the Minister.' It is reassuring that the precedent has been followed in connection with the Employment Promotion Fund."The union recommends, therefore, the Continuance of the ptesent method Of specific assignment of the revenue from motor taxation to the Main HighWays Fund. GROUPING OF TAXATION. "The Suggestion has been made that all motor taxes should be grouped under one head—the tax. Those in favour of the proposal claim that the ease with which collection' could be made commends it, as does also the effect it would have of spreading amounts of customs duties, licence fees and the like over a number of small payments for petrol purchased, thereby allowing them more conveniently lo be met. When analysed, its benefits are not as great as may be at first imagined. "Even though taxes are grouped it would not dispose of the necessity for issuing licences for the various purposes, artd except in the case of those relating to heavy traffic vehicles the feefi payable are not considerable. !>he abandonment of heavy traffic fees Would be against the well-founded opinion that petrol tax. does not fully Cover the share which heavy vehicles should Stand ill connection with road construction and maintenance. The absence af benefit likely to accrue from the ad<»)tion of the proposal, in the opinion of the Motor Unions, justifies its rejection." Mr. W. R. Carey, chairman of the executive of the South Island Motor Union, in endorsing the previous speaker's remarks, said that there was ho other Commodity that bore the same taxation as motor spirit. They believed it was the highest in the world, find he submitted that the deputation's request Was a reasonable one. He claimed also that there would be a greater expansion if the tax were reduced. ' MINISTERS REPLY. In his reply the Minister said that it was impossible ih the time it took to present the deputation's arguments to |et a full view of them. He would be glad to1 look into the whole case and submit to the Government the procedure he thought should be followed. "I think I can say straight away that there Will be no alteration this year," said Mr. Nash. "We have a certain amount of money to find id meet commitments we have entered into, and unless we can find some other wsy of getting that money, we cannot make any change in the exUtlrig procedure." He Quoted figures to show that while motor taxation in New Zealand might be high, it Wasi not the highest in the world. He Said there was an arguftient to be made out of the -fact that there would be a greater expansion of usage if the price were reduced, but this did not always apply. "We spend the money that comes to the Government by way of taxation," said Mr* Nash; "anjl the only reason We tax is because 'we feel that the money we obtain from the people who pay it Will be better spent by the Government. Some people may not agree with that." He added that'it would take a little tiniS to go into the recommendations put forward, but he thought he could assure them that on the present evidence ho change would be made. He Would gladly consult With the representatives of the Motor Unions if there Waß any possibility of a change in the incidence of taxation,