Monday, June 13

More Government spin

So the estimable Mr Darling wants to rethink the way we pay for our roads and wishes to charge on a "pay per mile" basis. This is in an effort to reduce the amount of congestion on the roads. But he doesn’t want to drive or price people off the roads, he claims.

Let me think this through. The number of cars on the roads is causing congestion. So he has one of two options – either enlarge the road capacity (by building more roads or widening existing roads) or, if he isn’t willing to do this, reduce the number of cars on the roads. He won’t do the first because of all the tree huggers and bunny lovers and he says he won’t do the latter. So helicopters are the way forward? No roads to build and if cars are eliminated, plenty of parking spaces for these vertically descending transport options.

It isn’t as if motorists are not paying enough for the necessity of owning a car in Britain. Bear with me as I do a very rough and ready calculation (which will be a gross underestimate) but it will illustrate the cash cow motoring has become for the Government and how road pricing will most certainly NOT substitute for petrol duty and road tax.

The figures I have used come from various Government websites (chiefly the Department of Transport and the Treasury) with the AA and RAC providing fuel estimates. These are an average of the various figures (which incidentally are remarkably consistent) but of course, since they are motorists’ organisations, must be roundly condemned and any of their figures dismissed as untrustworthy. Unlike the Government, who would never mislead anyone or misrepresent the truth.....

Ok – there are approximately 30 million cars on Britains roads. Each will pay on average £130 in road tax (according to the AA). This equates to £3,900 Million. Just jot that down and write ROAD TAX next to it.

Let’s assume that each of these cars does an average mileage of 12,000 miles a year, and that they average 35 miles to the gallon (feel free to put any lower mileage figure in you want and up the mileage. The overall figure will change but it won’t affect my argument).

So each car will burn 342.857 gallons of petrol a year. That’s 1558.659 Litres of petrol per annum per car. As there are 30 million cars, that’s 46,759.77 Million litres of petrol. Can we call it 46,760 million litres? Round it down to 46750 or whatever figure you fancy.

Now here’s the sting in the tail. If petrol costs 85p a litre, it is broken down into 21.7p for the producer to produce, distribute and sell at a profit. Then there is 51p in "duty" and VAT is charged on the WHOLE of the 72.7p, adding another 12.5p. So you are taxed on a tax and you can hardly say that adding duty to the cost adds value.

I should justify that last remark. Value added tax is charged when by processing something you "add value" to it. For example corn standing in a field isn’t much use – so by harvesting it, you have "added value" to it. Grinding the corn into flour makes it more valuable again, therefore you have again "added value" to it. Bake it into bread and this surely is more valuable than plain flour so you have again added value to it. And the Value Added Tax is therefore payable throughout. But as usual, I digress.

So for each litre of petrol, Mr. Brown collects a total of 63.5p in taxes of one variety or another. So Mr Brown’s tax take is £0.635 multiplied by 46750 Million or for those of you without a scientific calculator, that totals 29,686.25 Million. Jot that down under the ROAD TAX and mark it as PETROL TAX.

Add those two up and it comes to £33586.25 million or £33,586,250,000. I’ll call it £33585 million for the sake of brevity and fairness.

Now I said that this is an underestimate – and here’s my justification. I have not included Lorries or other commercial traffic. How many lorries, vans and other commercial vehicles are on the road – I could look it up and make estimates but that’s all they would be. I’m just not sure of the fuel consumption of various trucks, the mix between 44 ton Articulated trucks and something like a 3 tonner. So I have ignored this large class of road users (and on the M6, away from peak times, I’d estimate that 25% of all vehicles are HGV’s. It isn’t a lightly used motorway either). Motorcycles and scooters are omitted too for similar reasons – I couldn’t estimate the annual mileages with enough precision or their petrol consumption. It wouldn’t be a lot though, so I feel justified in omitting them from the total.

So how much is spent on roads by the Government?

Under 2 billion (and here they mean a billion to be 1,000,000,000) was spent on strategic roads (such as motorways) and 2.6 billion was given for Local Authority spending on roads. That’s £4,600,000,000.

Write that under the total for the tax and subtract it. A net profit to the treasury from cars alone of £28,985 Million.

BUT I hear the car haters scream – you scrounging bar stewards only contribute 3.9 Billion in Road Tax and our kind government spends 4.6 billion on roads. That extra 0.7 billion could be spent on the National Health, the starving millions in Africa, AIDS research, or increasing the payments to single mothers in this country.

Well, I’m pretty sure that if you include the amounts paid by HGV’s and other road users, then the 0.7 billion would be very nearly made up. But I would argue strongly that the taxes on fuel are just another form of tax on everyone, which supports the NHS, giving away vast millions to corrupt regimes in Africa, etc.

There is also the VAT take on other aspects of owning a car. These range from purchase tax and VAT on a new car (double taxation again) to servicing costs (VAT again) to spare parts (even safety critical ones like brake pads and light bulbs). Parking incurs VAT (though how putting a parking meter on the pavement adds value to a piece of road I’m not sure). Accessories? VAT again. Every inch of the way, the government has its rake off. I suppose the black box will be taxed too (VAT) so you can comply with the governments diktat that it must be able to tax you as efficiently as possible.

How much does this total? I’m not sure but I do know that £1 in every eight is derived from the motorist. You could look up the treasury estimates for revenue received and make your own estimates.

So if the Government abolishes duty on petrol and forgoes road tax revenue, where will the money they milk the motorist to add to general taxation come from? Answers on the back of a postcard to the usual address ...

But wait!!! - there is a way the system can be milked for the extra revenue which will force people off the roads at the same time. If a black box is fitted to the vehicle, then if it is based on GPS technology and operates similarly to a GPS receiver, it will update every half second. So every half second, the exact (to within about 5 metres) position of the vehicle is known. Which will then allow the speed of the vehicle to be calculated. And as we all know, speed kills and must be fined and punished severely. Automatic speeding tickets and points will arrive with your bill for driving on the roads. Much more efficient than speed cameras, more people can be disqualified (and made to retake their tests or retraining with the inevitable VAT biting again) and congestion reduced.

The Geastapo ran Europe with a manual card index system. Just think what they could have done with a database on a modern computer, linked to Identity Cards and GPS tracking of the population.

Big brother most surely has arrived.


Post a Comment

<< Home