Track Costs and Motor Taxation

Abstract

I. IN the field of transport economics, few problems have aroused more heated and prolonged controversy than that of track costs. Railway executives in many developed countries of the world have called upon the Public's sense of fair play to witness the railway's disadvantage in having to pay out enormous sums annually in the form of track maintenance and interest. How can the railways engage in fair competition with road haulage and 'bus firms who do not have to pay for the highways? It is argued that the conditions under which the two great transport industries compete should be equalized; then the rules of the competitive game would be fair to all players and the public would gain a more efficient transport system. I The main purpose of this article is to examine the validity of arguments showing that road users should pay for the services of the highways. It is concluded that motor taxation is not, and should not, be related to the cost of the track. Criteria other than the cost of the track should determine aggregate motor taxation. Finally it is sugt gested that motor taxation should be levied so that the marginal private cost of vehicle operation is brought nearer to the marginal social costs and the degree of congestion on our roads is reduced. 2. Before we can get some idea of the quantities involved, some definition of the term 'track costs' must be given. The arguments about the unfair burden of the railways stem from the fact that road users are not charged specifically for certain kinds of input while the railways have to pay for similar inputs. Without straining terminology, it is impossible to include all of these outlays under the head of track costs; for example, the accounts of road users do not show debits for police traffic control, but the railways must pay for their police. But the major bone of contention is the 'legacy of the past' in the shape of highways. Consequently we shall arbitrarily define track costs to include only those outlays of the railways connected with the maintenance and interest on the permanent way. The interest element is quite an arbitrary figure. Accountants have their own procedures for determining that proportion of the compensation payments which is called the capital cost of the track taken over; the figures have little economic significance. Sir Reginald Wilson (Comptroller of the B.T.C.) estimates the (accounting) interest payments on