Motorists Subsidised

[atlas_shrugged]

A letter in the Oxford times 8-Mar-18 page 24 gives these figures that indicate that motorists are subsidised:

In 2009 a Cabinet Strategy Unit report on urban transport

COSTS
Road building and maintenance £9bn
Excess delays £10.9bn
Accidents £8.9bn
Poor air quality £7bn
Physical inactivity £9,8bn
Greenhouse gas emissions £2bn
Water pollution £5bn
Noise pollution £5bn
Total £57.6bn

INCOME
Vehicle excise duty £5.4bn
Fuel duty £24.9bn
Other taxes £17.8bn (VAT on fuel, car sales)
Total £48.1bn

Shortfall £9.5bn/year

Please note these are the figures taken from the letter in the Oxford Times.

[Cyril Haearn]

Who wrote the letter, where did the figures come from?

[Mike Sales]

Who wrote the letter, where did the figures come from?

If you use a search engine you can find several estimates like this. Some, I think, give their workings. Some of the costs are not easy to quantify. This does not mean they do not exist.

http://ipayroadtax.com/no-such-thing-as-road-tax/when-will-drivers-start-paying-the-full-costs-of-motoring/

https://rdrf.org.uk/2012/12/31/the-true-costs-of-automobility-external-costs-of-cars/

[Mike Sales]

Who wrote the letter, where did the figures come from?

I searched for Cabinet Strategy Unit report on urban transport, and found this.

http://webarchive.nationalarchives.gov.uk/+/http:/www.cabinetoffice.gov.uk/media/307739/wider-costs-transport.pdf

[pete75]

This is an old one. These studies which claim motorists are subsidised take no account of all other taxes that people who drive pay. The top 1% who one would assume almost all use motor vehicles pay in total 3 times as much tax as the bottom 50%. The top 10% of earners pay 59% of all tax. Again most of these will use motor vehicles. Nobody is subsidising them.
If any motorists are being subsidised it's the lower income groups but as with any progressive tax regime they're subsidised in almost all of the other public services they use as well.

[Stevek76]

Um those figures are only for income tax. Ie the top 10% of earners pay 60% of the income tax which was rather misleadingly reported in the likes of the telegraph the other day to suit its political stance. The bottom 90% pay more than 40% of taxes like vat, council, national insurance etc.

Anyway, that seems a little irrelevant, if it's being paid for via general taxation then that is very much 'subsidised'.

The point of analysis like in the first post is to refute the idea that motorists pay for roads via VED and fuel tax and cyclists do not. It is very much the case that once the more external costs of driving somewhere are taken into account (collisions etc), the direct taxes on driving do not cover the costs of it to society and it is therefore 'subsidised".

[pete75]

Um those figures are only for income tax. Ie the top 10% of earners pay 60% of the income tax which was rather misleadingly reported in the likes of the telegraph the other day to suit its political stance. The bottom 90% pay more than 40% of taxes like vat, council, national insurance etc.

Anyway, that seems a little irrelevant, if it's being paid for via general taxation then that is very much 'subsidised'.

The point of analysis like in the first post is to refute the idea that motorists pay for roads via VED and fuel tax and cyclists do not. It is very much the case that once the more external costs of driving somewhere are taken into account (collisions etc), the direct taxes on driving do not cover the costs of it to society and it is therefore 'subsidised".

As I said any one who uses a greater value of state services than they pay in tax is being subsidised. If you're against that I suggest you start campaigning for an even more regressive system of taxation than the one we have now.

Afaik all taxation goes into a general pot and is then paid out from that. Don't know where your idea comes from that fuel tax etc is to pay for roads.

[mjr]

Afaik all taxation goes into a general pot and is then paid out from that. Don't know where your idea comes from that fuel tax etc is to pay for roads.

Talk to more motorists. A disturbing number think vehicle and fuel taxes pay for the roads.

[pete75]

Afaik all taxation goes into a general pot and is then paid out from that. Don't know where your idea comes from that fuel tax etc is to pay for roads.

Talk to more motorists. A disturbing number think vehicle and fuel taxes pay for the roads.

Some of it will go towards paying for roads but that's not the primary reason it's collected.

[9494arnold]

No figures here but the Bus industry is heavily subsidised and they still manage to exclude far flung rural areas whilst managing to effectively block popular inner city routes . And the damage those vehicles do to the roads is considerable.

[Tangled Metal]

Just out of curiosity, roads are used to carry goods cross country. What proportion of their value should we add to the cost of using our road network?

The roads actually add value to our economy and tax take more than just the directly identified taxes aimed at motorists. So do you think that without motorised vehicles being able to use roads would that cost our country more or less than the £9 or £10 billion shortfall?

Just curious, I don't know the answer but suspect these back of the fag packet calculations don't include the true status. So forgive me if I take them with a pinch of salt.

However I do believe as a nation we need to rethink our transport strategy. I personally believe individuals should lead that change by using bikes and foot to make those shorter journeys. I don't believe in no motorised vehicle use but certainly we should reduce our reliance on it.

[Stevek76]

As I said any one who uses a greater value of state services than they pay in tax is being subsidised. If you're against that I suggest you start campaigning for an even more regressive system of taxation than the one we have now.

I'm quite fine with subsidising things, however generally as a society you largely subsidise activities that you either have to because of a social/moral benefit (welfare) or that you wish to encourage people to do more of (e.g. be active) and avoid subsidising things that are harmful to society.

As mjr points out, regardless of the reality of money just going into a big pot (actually the tories did fairly recently nominally 'ring fence' VED for road maintenance - a PR stunt obviously since more than VED is spent on roads), a commonly used argument is that cyclists don't pay 'road tax' so get off the roads/should have to be tax/licensed etc. Individual incomes are irrelevant here, it's a question of whether the direct costs to the transport user cover the costs to society for that use.

The roads actually add value to our economy and tax take more than just the directly identified taxes aimed at motorists. So do you think that without motorised vehicles being able to use roads would that cost our country more or less than the £9 or £10 billion shortfall?

No these numbers will not cover travel time savings and the various wider economic gains however things get a little tricky there as you essentially end up with local minimums in the effective function. For instance if you have a car centric network and you lob a single or handful of bus/cycle lanes in you will generally cost the economy based on the normal analysis because you've hindered the dominant car mode without providing sufficient network to offset that by improvements to buses/cycles and attract people to do that. However the reverse also applies, imagine taking a cycle lane out in copenhagen and converting it to cars. So yes you could have great fun getting lost in numbers working out the optimal transport method but since the marginal gains depend on where you are right now I'm not sure it's very fair to include it in these numbers which are more associated with the direct costs and impacts of driving.

No figures here but the Bus industry is heavily subsidised and they still manage to exclude far flung rural areas whilst managing to effectively block popular inner city routes . And the damage those vehicles do to the roads is considerable.

But only because we're so car centric. Buses aren't viable because, outside of london, the only people who use them are generally those who can't afford a car, have some other absolute constraint to not being able to use a car for that journey and who aren't willing to cycle that trip. As such the numbers using buses are well below that which is needed to make a public transport network work well. Nor has privatisation helped. What is most profitable to a bus operator is not necessarily the most profitable for society as a whole, hence infrequent services outside of core commuting times.

[Mike Sales]

The point about the costs of motoring which are borne by others is that they are not paid by the motorist who makes a decision to drive.

They are a classic (often used in teaching) case of what the economists call externalities. The benefits to the car user are what the motorist pays for, but the costs imposed on others by that decision are not taken into account. This is a market distortion which leads to more car use than is good for society.

Two important costs not paid by the motorist as motorist are pollution and accidents.
Both result in losses in length of life and quality of life. The monetary cost of these can be estimated, but most people find this unpleasant. Nevertheless they are real costs and are paid, just not in pounds. If an accident victim were asked beforehand whether they would take a certain sum in compensation for their death or their reduced quality of life, they would probably prefer not to be hit. Similarly with air pollution.
Hospitalisation and medical treatment has its costs too.

It is no answer to this to suggest that the motorist pays these costs in general taxation. We all pay this, and there are many calls on this money, often more pressing than clearing up after the inevitable use of mass motor transport.

Tangled Metal, you should take a look at the various attempts to assess the size of these external costs. They are detailed and backed up with figures and reasoning. They are a long way from "back of a fag packet" guesses. It does not do you any credit to attempt to belittle them in that way.

The perennial complaint from drivers that they are excessively taxed has been challenged by a study which concludes that road accidents, pollution and noise connected to cars costs every EU citizen more than £600 a year.

The report by transport academics at the Dresden Technical University in Germany calculated that even with drivers' insurance contributions discounted these factors amounted to an annual total of €373bn (£303bn) across the 27 EU member states, or around 3% of the bloc's entire yearly GDP. This breaks down as €750 per man, woman and child.

The report recommends that such so-called externalities be factored into the cost of driving,

The idea that drivers are "the cash cows of our society" is wrong, the authors write: "On the contrary, it must be stated that car traffic in the EU is highly subsidised by other people and other regions and will be by future generations: residents along an arterial road, taxpayers, elderly people who do not own cars, neighbouring countries, and children, grandchildren and all future generations subsidise today's traffic."

"Internalisation of external costs is the essential thing in a market economy. It's a prerequisite for everything – for individual behaviour and for innovation within the car industry."

This was particularly the case for climate change, he said, which unlike accidents was not partially offset by insurance: "With climate change every burning of fossil fuels creates the same amount of damage, so let's charge the population for driving. Then everybody has a choice. They can use a bike sometimes, or the train, they can drive more slowly, they can think about living closer to their work.

https://www.theguardian.com/world/2012/dec/25/car-pollution-noise-accidents-eu

[Cunobelin]

This is an old one. These studies which claim motorists are subsidised take no account of all other taxes that people who drive pay. The top 1% who one would assume almost all use motor vehicles pay in total 3 times as much tax as the bottom 50%. The top 10% of earners pay 59% of all tax. Again most of these will use motor vehicles. Nobody is subsidising them.
If any motorists are being subsidised it's the lower income groups but as with any progressive tax regime they're subsidised in almost all of the other public services they use as well.

The thinking was that when you take the "average motorist" and compare them with any other "average person", all pay the same when it comes to "other taxes"

In fact I remember one study that pointed out that commuting cyclists tender to be in a higher demographic group than the commuting motorist and was therefor probably paying more in taxes than the motorist

[Mike Sales]

Here is a bit about the problems with externalities.

[quoteI]n economics, an externality is the cost or benefit that affects a party who did not choose to incur that cost or benefit.[1] Economists often urge governments to adopt policies that "internalize" an externality, so that costs and benefits will affect mainly parties who choose to incur them.[2]

For example, manufacturing activities that cause air pollution impose health and clean-up costs on the whole society, whereas the neighbors of an individual who chooses to fire-proof his home may benefit from a reduced risk of a fire spreading to their own houses. If external costs exist, such as pollution, the producer may choose to produce more of the product than would be produced if the producer were required to pay all associated environmental costs. Because responsibility or consequence for self-directed action lies partly outside the self, an element of externalization is involved. If there are external benefits, such as in public safety, less of the good may be produced than would be the case if the producer were to receive payment for the external benefits to others. For the purpose of these statements, overall cost and benefit to society is defined as the sum of the imputed monetary value of benefits and costs to all parties involved.[3][4] Thus, unregulated markets in goods or services with significant externalities generate prices that do not reflect the full social cost or benefit of their transactions; such markets are therefore inefficient.[/quote]

https://en.wikipedia.org/wiki/Externality