MOTOR TAXATION

Nelson Evening Mail, Volume LXI, 24 June 1926, Page 2

MOTOR TAXATION

THE FUEL SCHEME 'I'llKOI!V AND PRACTICE (By LI. Massac Bui:-l) As the Lime in which eve x physidijfy it, citi/ep in employment will own a motor vehicle, is farther o f f as a result of the strike throwing the- national recovery machine out of gear, it follows that taxation of aiitomohilisni will become an increasingly vexed problem oi the movement for an indefinite period. Thus on one hand (lie'normal rate of expansion receives an artificial check, and, on the other, demands on the Exchequer inorei e. In -other words, in regal'd to this, as all other phases of human endeavour, we shall see the effects cf exploiting the system, of reducing the buying power of money, thereby making it, the dominant factor in retarding the return of tho community to prosperity, as distinct from increasing the purchasing power of money so that the same income may nevertheless give a higher standard of living, because each individual will be able to Imy more with it—that being the only scientific way of getting out of the vicious circle of rising costs. What every worker, whether with hands or brain wants, is, not more wages, but more commodities—alike motor vehicles dotties, bread, and so on—than he. can obtain to-day. Meantime the latest interruption to that process,, which we term the return to prosperity, of course works more damage in a week to,an can be made good in a year. When taxes are paid, the average of trading in any connection does hot yield profit amounting to the mean turnover of anything from two to five Weeks out, of .gvery 52 weeks enterprise. This, of course, is not : a sufficient margin to cover the posts of dislocation, and loss involved in throwing enterprise out of gear for even so brief a spell as a few days. Thus, twelve months 'lienee, the balance sheets of one undertaking after another among motor manufacturing and trading enterprises, in common with all manner of others, will show losses instead of piofits, apart from which, much capit.u Will be lost by exhausted concerns that were hovering on the borderline going bankrupt instead of winning through—every penny so lost representing a permanent reduction in the wealth of tlie nation. Against-this, demands on the ration’s purse,—the revenue of taxation —grow greater at the very period that the yield will be least. To add to such burdens is, of course, still further to retard recovery, because there is the less money left in the individual’s hands with which to buy commodities and so inerghse business. COST, SCALE iAND SCOPE Cost is mainly dependent on scale of enterprise. Thus in building motor vehicles—as in making buttons or any other wares—if there is a sale for ten vehicles only a week, or say, 500 a year, the cost of manufacture will render it impossible to sell each machine at less than, say, £SOO. But if you can multiply the demand tenfold, turning out 5000 a year, without reducing wages, but by giving a great deal more employment, you can offer a somewhat superior article for £3OO and make just as high a percentage of profit. And if your market ckn be developed to 50J000’ a year, you can still further improve manufacturing methods, gVre still more employment, yet sell the. superior vehicle equally profitablv for anything between £l5O and £2(JO. That is in theory: instead, it is a- mere summary of the story of the amazing automobile industry of America, a lesson we have been gallantly struggling to put into practice in this country,' despite war impoverishment and other handicaps, the much praisod trans-Atlantic industry hasneither known nor dreamed of. Morris, is the. name of the British enterprise in ear building that will occur' most readily to mind in illustration: but a study of the specifications and price lists of scores of other manufacturers reveals that parallel, if less ambitious, endeavours are the practise, not the exception, among British, ns well as Continental, manufacturers. Her- it is courting disaster to produce what you cannot sell; and looses <>l varying degrees and gravity are involved in sudden shrinkages in the, scale 6f demand, such as have just been occasioned. Every motor or other manufacturer, plans to do the greatest amount of business he can each year. All he has to guide him in the perplexing but inevitable task of making plans ahead of bis estimate of what the Americans call the saturation point, which is a very quicksand. You never foreknow precisely where it is, because you cannot control circumstances. Theoretically, you have only to know the number and average wealth of the population, to know whether it can own 1 motor velficle to every 50 people; or 1 to every 20; or 1 to every 10; or 1 to every 5, and so on. In practice, however, a bad harvest will mean comparatively restricted purchasing prnycr for a year, throughout America, so that the steel and all other industries would languish though it is a war enriched, lightly taxed community. Nor is this all. Even in unprecedentedly prosperous times this so-called saturation point emerges in respect of individual enterprise what lime rival enterprise is either constant or expanding. Among current illustrations in the United States we have the case of the Ford: three-parts of the business to-day is replacements, one part only representing the sale of complete new vehicles, But America is acquiring more motor vehicles per head of population every year. Therefore, to alter the proportions of his enterprise, Ford has only to change his nearly 20 years old type. THE INS AN,D OUTS OF IT Since such are the problems of industry and trade in the phenomenally prosperous New World, whose world export trade will receive yet one more fillip as a consequence of May Day enterprise in these Islands, how much more complex is the task here. It is urgent as never before to restore industry and trade to prosperity, yet vastly greater sums of current revenue are and will he needed to pay for the mnrc/querices, immediate and delayed, of upsetting the machinery of normal life. From costly and repealed experience we know liiat excessive taxation either defeats its purpose because people go without—instance certain post-war duties on particular branches of the tobacco and wine tva/Tes. which dwindled to mere insignificance in consequento - or it so reduces the scale of demand that the market shrinks and. therefore, if the commodity is manufactured, the cost of it increasas for that reason alone. Thus, if motoring is to develop normally in a si ill higher taxed community cm,- more baffled on the very verge of achieving the recovery of general prosperity machine and running—including taxation—costs must be, not dearer, hut cheaper, or .at least, no dearer, which last would mean doing a higher proportion of trade with those which, (inan-i einllv, are not really in a position to motor. Before this month’s nation-wide upset, it is understood that in anticipating a re-investigation of the possibilities of what is called a petrol tax, that the Chancellor of the Exchequer had in mini! 8d a gallon duty, plus a vehicle license fee: in other words, a return to the fundamentally wrong principle of two taxes on one and the same tiling, which was carried to the limits of absurdity in practice when as q war /

measure to income and super tax were added corporal ion profits l ax—three taxes on one and the same profit, which is the political way of making believe that one thing is three separate ones, lhereby miseditealing the public as io the real burdens home. '1 he average motorisl who lias been lead to think a petrol tax would he a preferable method lo tlm present .scheme lias l«fcm led do iibcri-toly by the u.gi.latmg organisations tov lieiteivo that he wouidpay motor mg taxes c-i h tone 1 ■ r.'h-d the tank <»: his car, and In- dona with the business; whereas, with a license tee to pay as well, that eminently desirable principle would be violated at the outset. Perhaps one mav venture to wonder, too, how the average individual would relish paying round about 2/- a gallon for bis petrol. Instead of realising the cost of motoring once a year, as lie does when taking out his ear license, he would realise it afresh every week-end. if not oftener. Assuredly, the cumulative effect would interest' the. theoretical mind. Motorists ns I know them, however, are not Wishful Io supply material for'such investigations gratis, far less at. such appreciable cost, to themselves and in Fitch aggravating circumstances-- for each "(ill up” would soon cm ire to he untiling less than an aggravating circumstance. And (his without taking into account, the by no means to bo ignored fact that, in face of the situation that has arisen, 8d a gallon may not suffice. Indeed, here lias arisen promptly, precisely siicli a circiiiiistame as I foresaw when, discussing the motoring proposals of the Budget in these columns recently. explaining that among .(he disadvantages of a petrol tax was the fact I hat the payer would never foreknow his liabilities, so no machinery would bo needed to vary- the scale of il al a moment's notice, and nine times out of ten sueli machinery .is used one way only—to increase the scale. Nor, in connection with encouraging home produced fuel as a possible means of profiting these islands, and ti, season of prosperity to the coal industry, do we know how much more suitable’than the present scheme the petrol using motorist would consider il when paying his 8b a gallon or more, duty he found his fellow motorist escaping contribution to the revenue ,hut while nevertheless, enjoying motoring and the equal use of (tie roads merely because lie used -benzole or other home produced fuel, the production of which, the. advocates suggest, would he encouraged by leaving it duty free.