On Thursday last, the so-called Taxpayers’ Alliance (TPA) returned to one of their favourite subjects, that of taxation on road users. In a so-called “Research Note” titled Excessive Motoring Taxes [.pdf], a smokescreen of verbiage is used to justify highly selective use of figures to demonstrate that motorists are being taxed excessively, while ignoring costs that are so inconvenient as to prove their argument not just misleading, but blatantly dishonest.
The theory underpinning the TPA analysis is all to do with what are called Pigovian taxes, those that are intended to correct for “negative externalities”, for instance, a tax on pollution with the objective of reducing it. However, this is mere cover for the TPA’s selective use of figures: the costs of congestion (p3) are ignored by glibly stating that they are “internalised within the body of road users and create an incentive to use other methods of transport”.
Moreover, the cost of congestion quoted is from 1998, whereas the tax figures quoted throughout the “Research Note” are from 2008-9. This is a routine and unsurprising deception. The costs of road congestion are a reality, and waffling about Pigovian analysis cannot cause them to vanish: the generally accepted figure for 2004 – which will be far higher today – was around 20 billion.
Also, the TPA manage to ignore the total cost of traffic accidents. According to DfT figures, the total value of prevention of reported road accidents in 2009 was 15.8 billion, and including accidents not reported, that figure could be as high as 30 billion (I’ve used the latter figure). Added to this may be police and court costs, as well as those of noise and other pollution.
Accepting the TPA figures for motoring taxes, road building and the social cost of greenhouse gas emissions, assuming a police and court cost of 7.5 billion (it was 3 billion in 1994), and including congestion and accident costs, we have a stark comparison.
Motoring taxes: 30.2 billion
Motoring costs (TPA): 12.3 billion
Motoring costs (ZS): 69.8 billion.
I accept that the Zelo Street analysis is flawed, as it does not take into account the increase in congestion costs from 2004, and that this may well increase the total figure to over 80 billion. I also suggest that the TPA accept that they have, once more, been caught fiddling the figures to fit their conclusion, and desist from such fraudulent behaviour in future.