Hmmm... looks like I've got some explaining to do
Hmmmm ... looks like I do too.
Actually, I'm beginning to think that the problem lies not so much in our just not getting each other's arguments as in a fundamental philosophical difference.
Nick wrote:I am attempting to compare this to education, and little Johnnie doesn't have the choice of whether he goes to school or not. By comparison, the OAP must make the journey ... The point I was trying to make is that a proportion of the OAP's taxes also contribute [to] the cost of the bus pass ... We are only comparing different ways of conducting a journey, not whether or not to undertake the journey ... But the journey is still being made by an empty seat ... Re-examine this in the light of the fact that the journey must be made.
OK, I understand now. These two OAPs must
make a journey. They both have a bus pass. They both pay taxes. One chooses to travel by bus; one chooses to travel by car. The one who travels by bus pays nothing (over and above taxes); the one who travels by car pays for petrol, and perhaps a tiny bit of wear and tear, and she also pays for insurance, and tax on the car, as well as the other taxes. So there's no denying that the one travelling by car is paying more for her journey than the other one is paying for hers. What I reject is the idea that the driver is paying for the journey twice
Now, I suspect that the issue of loss of marginal cost or lost marginal revenue is a bit of a red herring, and probably a lot more complicated than either of us is making it. But still, I'd like to try to make sense of it. As you said, we're comparing two different ways of making a journey. And only two different ways. We are not at this point concerned with the option of travelling on the bus and paying a fare. And the person we're interested in is the person who decided to drive, rather than take the bus, because she is the one who, you're claiming, paid twice for her journey. If she had taken the bus, she would have paid nothing to the bus company, but the bus company would have claimed back her fare from the Government. So the woman's decision to drive meant a loss of marginal revenue for the bus company, but no marginal cost for the Government and hence for the taxpayer. The taxpayer is paying for the woman who took the bus, however. And the taxpayer is also paying for the administration cost of the free bus pass scheme, and there's also been some talk of fraud by bus companies claiming back the cost of ‘phantom’ passengers. So a proportion of each OAP's taxes would go towards that. If we assume that the woman who took the bus would have taken it even if she'd had to pay for it, then in her case her having a bus pass did involve a marginal cost for the Government. The OAP who drove is, like all taxpayers, paying for a proportion of the total costs, or total lost revenue claimed by the bus company, i.e. a proportion of the fares that would have been paid by all the OAPs who are travelling on buses for free, if they didn't have bus passes, as well as for administration, and for bus company fraud. She is not paying for the bus journey she might have taken. She is not paying for an empty seat. There was no seat reserved for her.
Nick wrote:Yes of course [vehicle excise duty is] not hypothecated, but the OAP is choosing to incur taxes which are used for all sorts of things, instead of paying no additional tax for the journey.
Yes, she is paying extra taxes which are used for all sorts of things, including road maintenance. But that's irrelevant. The other OAP might be paying extra taxes too, for all we know.
Nick wrote:First of all, the taxes paid by road users wildly exceed all the direct and indirect costs of roads and related things.
OK. I'm not quite sure what you mean by the indirect costs of roads and related things, if you're not referring to externalities. I accept what you say as far as the direct costs are concerned. (I have found a report from the House of Commons Transport Committee, "Taxes and charges on road users", Sixth Report of Session 2008–09, that says that "most studies have found that total payments in taxes and charges by road users exceed Government expenditure on roads by a large margin". According to the AA, "Estimates show that motoring taxation amounts to around £46 billion[---][/---]this includes fuel duty, VED, VAT and business motoring taxes. The amount spent on the roads is less than a quarter of this[---][/---]just over 30 years ago there was much greater equity with £11.4 billion of £12.8 billion motoring tax revenues being spent on the roads.") But in my view, the cost of medical care for victims of road-traffic accidents (along with others things like the cost of policing the roads) is an indirect cost of roads and related things. The Campaign for Better Transport, using Government research on marginal costs of congestion, infrastructure, accidents, local air quality, noise and greenhouse gases, claims that there is a total cost of externalities of £70 billion[--][/--]£95 billion per annum at today's prices (the major component being congestion). Of course, this doesn't include the positive externalities you mentioned, but it doesn't include all the negative ones either, like loss of landscape and tranquillity.
Nick wrote:(I might have said more clearly the OAP pays the same contribution to the cost of the bus journey, rather than ‘the whole cost’)
That's certainly an improvement, as it takes us further away from the old "paying twice" myth.
But it still talks about the cost of the hypothetical bus journey, rather than the cost of bus passes for pensioners, and I think that's misleading.
Nick wrote:It is also true that there are external costs eg pollution, noise, deprivation of country hedgerows etc., but there are corresponding external benefits. Without the road system there would be a dramatic reduction in her standard of living, as the OAP would be deprived of all the cost savings which result from a modern transport system, which allow for the bus pass in the first place..
Absolutely. As with so many public services, there are costs and benefits, both tangible and intangible. How difficult it is to calculate net costs or cost savings, let alone an individual taxpayer's share of those.
Nick wrote: Tax-payers do indeed pay for many things they don’t use (and rightly so).
They don't "pay for
" them. They pay something towards
many public services they don't use (and rightly so). And sometimes they don't use them because they choose not to, or don't need to. And sometimes they don't use them because they are not eligible to use them. But even if they don't use all services, chances are they'll use a fair number of them. When we pay taxes, we are not paying just for the services we use or are eligible to use. We are paying for services that bring (or are supposed to bring) overall benefits to our society. Of course, when we pay taxes we expect there to be "something in it for me". But that something can be, and to a great extent is, quite diffuse and indirect.
Nick wrote:The point is, that if they wish to use an alternative to the service for which they have paid, they pay again.
Except, as you agreed, they are paying a contribution
to the cost of the service, rather than, necessarily, the whole cost. We don't know how big a contribution, but if it's not for the whole cost we can't say that they're paying "again" or paying "twice". And in any case, by singling out one particular public service, we're not getting the full picture. Suppose the OAP who took the bus had paid taxes all her life, had kept herself healthy and needing very little in the way of medical treatment, had generated very little landfill waste, and had never commited a crime or civil offence. And suppose the one who drove avoided paying tax whenever she legally could, smoke and drank heavily, dropped litter, frequently drove faster than the speed limit, parked on yellow lines, let her dog foul the footpath and had wild parties that often ended with the police turning up at three in the morning. It is misleading to contrast the tax contributions with the service use of two people, and suggest that one is paying twice for something and one isn't, by looking at one service alone.
Nick wrote:Suppose the nation paid for a free theatre seat for every OAP once a year. If our car-driving OAP decided not to go, her seat would be wasted, but she would be paying a share of the cost of the seat through her taxes. If our OAP went, but bought a ticket for the seat next to the “free” seat, she would be paying twice: first, her tax contribution to the “free” seat and secondly, full price for the seat she actually uses.
Hope that helps.....
Not in the slightest. In this case, the unused seat is a wasted seat, so it is fair to say that the seat has been paid for twice [---][/---] or rather that two seats have been paid for rather than one, and only one used. (Although in real life this wouldn't happen; she'd probably have a voucher that could be exchanged for a ticket to a theatrical performance of her choice.) But her tax contribution to the "free" seat, or rather to all the free seats for OAPs, does not necessarily cover the cost of that seat, as you've agreed. Therefore it is inaccurate to say that she has paid twice, and misleading to look at that particular service in isolation, when we don't know what other public services the OAP is availing herself of.
Getting back to education, if the Independent Schools Council are to be believed, the cost of educating a child in the state sector is over £9,000 a year. As I understand it, only 13% of public spending in the UK goes on education. So, ignoring the fact that that includes spending on universities, if taxpaying parents were actually paying enough tax that one might get away with saying that they are, in effect, "paying for" the entire cost of educating just one child in the state sector, they'd have to be paying an annual tax bill of something approaching £70,000. Now, it may be that many of them are paying that much. But if we're talking about the increasing numbers of parents on fairly modest incomes who are scrimping and saving to pay for their children's school fees, then I'd guess that they're not paying anything like that.
And that's ignoring the fact that some people have more than one child. If a parent is paying for one child to go to an independent school while two others are going to state schools, then it makes even less
sense for that parent to be said to be paying twice. And even if they're all going to independent schools, and the parent has to pay three lots of school fees, they're still not paying three lots of tax going towards paying for a child's state education.
Of course, that's not a fair way of looking at it, because it ignores everything else that their tax money goes towards paying for. But that reinforces my point. One can't look at a single public service in isolation and say in any meaningful way that an individual is paying for their share of that service, and that therefore, if they don't avail themselves of that service and pay for an alternative service, they are paying "twice".