The Road to Investment

The idea that central government can influence the behaviour of its citizens via taxation still holds sway in most democracies across the world.

When government becomes dependent on the revenues from a specific tax, however, an obvious conflict of interest emerges.

Vehicle excise duty and road fuel duties, for instance, raise in excess of £20 billion for the treasury each year – but where does the money go? Public opinion seems to regard such taxes as pure revenue-raising by Whitehall. People do not believe that the money goes towards investment in alternative transport infrastructure. In part, this is due to a failure of consecutive governments to communicate to the public how and where they have invested the revenues from road and vehicle duties. In the main, however, public perceptions have been spot on. The revenues raised from the above taxes have swelled the coffers of the treasury and have not been used to offset carbon emissions. Indeed, in spite of the relatively high duty levels in the UK, compared, for instance with the US, the investment in and development of alternatives to petrol and diesel fuel has been minimal.

Here is where the Labour party must now be radical. It must recognise that the old model of taxation has been limited in improving our transport infrastructure and environment.

People are sceptical of central government’s intentions and actions in relation to road and vehicle tax. Many commentators stress the arbitrary nature of such taxes. Road-users have a right to ask who sets the tax rate, why such a specific rate has been set and for how long it will remain at such a level?

In the forthcoming policy review, the Labour party must debate road and vehicle tax as part of a wider analysis of the relation between government and how it uses tax revenues.

We are fortunate in that we already have a model, some would say a blueprint, to build on. Back in 2000, London mayoral candidate, Ken Livingstone, campaigned for the introduction of a congestion charge in the centre of the capital. Three years later, the scheme was introduced and since then private car usage in central London has decreased significantly. “Red” Ken took the market-based idea of charging drivers according to their car-usage in specific zones and ran with it. It is widely agreed that the congestion charge has been a success. Other cities have followed Ken’s lead and Mayor Boris Johnson has been cautious, despite pressure from lobbyists, about changing the parameters of the scheme too much.

The elephant in the room, of course, is investment. In order for the congestion charge to work as smoothly as it did, City Hall realised the amount of investment that was required prior to implementing the scheme. Thousands of new buses, driver training sessions, route redesigns and extensions, and an increase of policing and security were introduced ahead of the charge to make the transition as smooth as possible. Contrast this with the Tory-Lib Dem government’s recent announcement that rail fares for commuters will rise alongside tax increases with minimal or no improvements in services for much of the country. Labour must be bold and offer an alternative to the government’s austerity measures.

In order to make a real and lasting impact on the way Britons travel and to reduce our emissions in line with the most cautious of independent recommendations, we need a sea-change in the way the government taxes and its attitude towards investment. The policy review should provide a forum in which these issues can be rigorously discussed.

This article first appeared on Labour Uncut.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s