MORE MOTOR TAXES

Southland Times, Issue 20228, 13 July 1927, Page 14

MORE MOTOR TAXES

Why Not Get Value? 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 possible, give twenty shillings’ worth of value to motor tax payers for every pound «f tax expended.

That the basis on which motor tax reVeaue 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 in 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 from our own. SOME FIRST PRINCIPLES. Turning to the United States, one finds a vast body of literature on the basic principles of highway finance. Four out of every five motor vehicles on the roads of the world are in the United States, and in a number of its forty-eight States will be found highway conditions fairly closely approximating to our own. Among the most valuable contributions to this American highways literature are the addresses delivered by Mr Thomas 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 states, 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 country-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 roading system bases highway policy is that 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 in 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 to railway station and farm to market-town roads. This has died out in America as motor-vehicle ownership has become more general. Mr MacDonald, in various papers, has laid great emphasis on the point that no State can expect an adequate highway system so long as its main roads are dependent on county 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.” 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 required,” says Mr MacDonald, n is clearly dependent upon the traffic, and if the traffic be known the kind of surfacing or pavement to be applied, or whether to apply any surfacing at all will be a relatively 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 improvement. . . 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 his 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 motorcar or not. Next in order are the special benefits, such as those to agriculture, manufactures, railways, 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 MacDonald, “must be taken into consideration in making the assessment for the construction and 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 the position as a whole, the conclusion is reached that "it is especially appropriate to devote the money raised bytaxation of the road user to maintenance.” The total revenue derived from the road user, furthermore, should not be out of proportion to the benefits derived from the direct use of the roads. If a balance of euch funds, fairly raised, remains after the maintenance requirements have been provided for, there can be no objection to applying it to construction. Where this is not the case construction should be provided for from general revenue. The final conclusions reached by Mr MacDonald are:— (1) The .maintenance of inter-State and State roads should be a charge against the read 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 cnly beneficiary. (3) The return to the public in 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 series 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.

HOW AMERICA ALLOTS ITS TAXES. The collection and distribution of the motor taxation revenue rests with the States. There are 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 Mr Trumbower, economist to the Bureau of Public Roads, the license fees in 1925 yielded 260,000,000 dollars, and the gasoline taxes 146,000,000 dollars, making a total of 406,000,000 dollars. equivalent to 31.5 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:—

New Zealand conditions are most closely approximated in the Mid-Western agricultural States. Summarising the position in these States Mr J. T. Donaghey, State Highway engineer to Wisconsin, recently gave the average conditions as follow’s:—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 highway system, 10 per cent, of total mileage; motor vehicle travel, 64 per cent, on primary highway system, 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. REAL SERVICE TO MOTORISTS. Wisconsin is a Mid-Western State which has reached a very high degree of efficiency in its highway service, and its way of doing things is worthy of particular study. It selected the roads making up its primary highway system on the basis of linking up every town of 5000 or more inhabitants, the mileage not to be exceed 5 per cent, 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 the 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, and improved as traffic warrants and funds permit. Its Highway Commission holds that a road 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. Every Wisconsin motor vehicle owner, moreover, receives free with his annual number plates a freshly prepared map of the State highways, showing the nature of the surface on 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 our 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 and over 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, Dannevirke, Masterton, Upper Hutt and Wellington. Two central highways would complete the main primary system—one running from Bulls via Marton, Taihape, and Taumarunui to Te Kuiti; and the other from Napier, via Rotorua and Cambridge to Hamilton. One centre only remains to be l linked up—Feilding, which has 4263 inhabitants and is adjacent to the PalmerstonWanganui highway. In 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 link would probably be included in whole or part from Greymouth to Christchurch, say, from Greymouth 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, Hanmer Springs, the Hermitage, etc., most motor vehicle owners would desire allowance for such roads in the national system. In the North Island, Waikaremoana, Tokaanu, ett., are omitted. If the primary system was fixed at 8 per cent, of the total roads we should reach the following position:—

This would permit of the inclusion of 120 miles in the North Island to national scenic resoru, 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 on the various sections of the system. The cost of the primary system would thus work out as follows, with administrative y 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 the following figures: PRESENT HIGHWAYS BOARD REVENUE. £ Customs duties on tyres 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 £562,000 on the 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 nearly as much as the tyre 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 tyre tax. This would probably be more advantageous to motor owners than 2d on petrol plus the tyre tax. The oil companies might put the price of petrol up by 3d a gallon if a tax of 2d were imposed. They probably would not put it up by more than 4d with a 3d tax. The extra penny in such event would not be loaded with trade profits. A similar volume of taxation by tyre duties would carry wholesale and retail trade profits, equal to anything from 30 to 50 per cent, over the Customs receipts. Threepence on petrol and duty free tyres, might save the motor owners anything from £60,000 to £lOO,OOO annually as compared with 2d on petrol and 25 per cent, duty on tyres. Let us suppose that the tyre duty is taken off and 3d a gallon on petrol imposed and no exemption 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 Thie is an increase of £362,000 in motor taxation over present payments, but the nett increase to the payers might be from £60,000 upwards below this figure if the reduction in tyre prices referred to above were realised. Over all classes of motor vehicles (including cycles) it would run at about £2 per annum per motor vehicle additional to existing taxation. LAYING OUT THE MONEY. The next question is how this sum of £847,000 per annum could be laid out to give the utmost service to motor vehicle owners. An equitable and attractive basis would probably be one on the following lines:— 1. —Creation of a proper Highways Department to (a) supervise all highways expenditure; (b) to supervise traffic control, devoting special attention to the reduction of the accident hazard; and (c) to provide traffic service by signing and marking the roads, issuing complete 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 be 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. All this ground might be covered on a comparatively simply 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 penny a gallon on petrol. The second penny a gallon on petrol might be allotted to the Highways District Councils on a mileage basis for expenditure on the secondary highways. The third penny could be allotted in proportion to the motor vehicle registration in each Highways District. One-third of this penny might go to the Main Highways Board for special expenditure adjacent to urban areas. 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 yet were frequented 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 figures:— PRIMARY HIGHWAYS. —Expenditure.— £ Maintenance and improvement of 3244 miles at £l5O p.a. (This sum to be divided between N. and S. Islands, according to motor registrations) .. ~ 487,000 Administration, traffic control, sign-posting the roads, issue of maps and other motor service 47,000 534,000 —Revenue.— £ License fees,, .. 250,000 Government grant 35,000 One penny per gallon on petrol .. 187,000 One-third of Id on petrol .. .. 62,000 534,000 SECONDARY HIGHWAYS. —Expenditure.— £ Subsidy on 6000 miles, averaging £4l 10/- per mile per annum 249,000 249,000 —Revenue.— £ One penny per gallon on petrol distributed to each Highways District in proportion to its total road mileage 187,000 One--third of Id per gallon distributed on motor registration basis 62,000 249,000 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 of this, and the cities and boroughs should have a voice in the expenditure on roads t in their environs.. £62,000

It will be seen that on 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 motor-tax 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 might, of course, also be engineer to a county or 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 individual counties possessing plant to do 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 x the United States and found generally equitable. Its basis is service to traffic, and allotment of the funds available jn 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. Under such a scheme as that outlined there should no longer be any necessity for local motor taxes double-banked with national taxes. The commitments under the Wellington-Hutt Road tax scheme should be defrayed out of the various portions of the national account into which the roads fall, and the work completed out of the 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 County, 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 money than is delivered by the Main Highways Act as it stands on the Statute Book to-day. (Concluded.) [The previous articles in thie series appeared on June 22, 23, and July 5.]

License Petrol fees, taxes, per per cent. cent. Construction and maintenance of State highways system .. 71.5 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

North Island . South Island . Total Rurgl Roads. Miles. . .. 22,293 . .. 18,262 Total Highways. Miles. 1,783 1,460 Dominion . . .. 40,555 3,244