Should Road Taxes Be Collected At The Pump?
Submitted by Tony ‘Kite’ Gibbs
The recent proposals by the President of the Barbados Chamber of Commerce (BCCI) to recover road taxes through fuel tariffs at the pump may seem administratively elegant at first glance, but to the non-economist like myself, is riddled with shortcomings, economic and otherwise, which do not appear self-evident to many in the Barbados Economic Society.
Road taxes are fixed charges levied by the government on vehicles for the right to use the roads in this country. Collecting road taxes at the pump through volumetric rates will always result in revenue adequacy problems. There will be over-collection of taxes when the economy is good or when oil prices are low and under-collection when economic circumstances force motorists to drive less. Road taxes collected in this manner will eventually be biased towards over-collection since there can be no conceivable way for Government to true-up and reconcile collected taxes on a month-to-month basis, in a revenue neutral manner, similar to what occurs with BL&P and the fuel clause adjustments.
For efficiency purposes, regulated prices such as fuel prices should reflect marginal costs. The common view is that consumer welfare is maximized as long as the value placed on a good is at least equal to the additional resources that must be committed to produce that good. When fuel prices are further burdened by duties and now road taxes they serve to distort prices in a manner that raises problems for allocative efficiency and create unintended outcomes. To avoid paying higher taxes, some motorist may look for substitutes such as electric vehicles, LPG conversions or may even turn to smaller fuel efficient means of transport. Diesel may also be a consideration because of its fuel efficiency. These actions not only distort the market but may result in less tax revenues and a greater tax burden on those motorists who are unwilling or unable to make the switch.
By far the biggest concern one sees with this proposal is the equitable distribution of this tax burden. The BCCI President is reported to be of the view that this tax will be ‘more equitable’ relative to road usage. Meaning that the more miles you travel each day, the greater the tax burden should be. She is also of the view that non-commercial road users should bear a smaller burden than commercial road users. The Barbados Economic Society seems to have found favour with most if not all of these ideas calling them ‘novel’.
Notions of equity are always very tricky issues since they are generally influenced depending on where you sit. The most common understanding of tax equity is that equally situated citizens should bear the same tax burden. Also, there is a notion of equity that suggests that those who make more should pay more. Now my question to the BCCI President is how equitable is it for a St Lucy resident to pay higher road taxes simply because he/she has to travel in traffic to Bridgetown to work each day while a person who lives and works closer to town pays less? What about taxi drivers, mini bus operators, freighters, fishermen etc who make a living from transportation? Will they not suffer a significant increase in their operating costs and be forced where possible to pass it on to customers? The issue of commercial users paying more is really a non-issue. They already do that, so that will not change. What will change is how much more they have to pay for the same level of road usage.
Finally, we come to ease-of-administration, whereby government is now asked to delegate to others the collection of taxes. The feeling here is that it has worked well for VAT so why not try it for road taxes. Well, to that suggestion I say` good luck! And to kill two birds with one stone, why not make gas stations check for insurance as well. The simple truth is this seemingly benign, elegant and novel form of tax collection is really a Trojan horse cloaked in the gown of administrative efficiency. Yes, productivity maybe low in the Pine and other Government offices, but is that reason to further swell our unemployment numbers?
Barbados Underground 
@ Hants
You do realise that with the new method even you Mr.Tourist will be contributing to Govt coffers when you visit…..Yes Hants, is that not indeed equitable?
By the way the sea down here is so rough even the bay snappers running from the 10 ft pouding waves…
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@ Hants
Don’t mind menopausal Miller…
Bushie agrees with your “Layman’s opinion”.
There is more to road taxes than collecting dollars.
There is also the opportunity to influence habits and trends.
Bajans are the kinda brass bowls that prefer to buy expensive show-off cars rather than invest in their future through buying shares, stocks etc. Road tax is an opportunity to make it more DIFFICULT to do that kinda shiite….
By charging LOTS more for large ridiculous luxury cars;
by forcing owners to make an annual trek to the Pine…
by forcing owners to pay annual registration fees
by insisting on insurance coverage
…we can hopefully influence behaviors….
WHAT WE SHOULD BE SEEKING TO MAKE EASY…and what the Shuffler lady SHOULD be promoting, are means and methodologies through which Bajans can be ENCOURAGED TO INVEST IN local businesses, in local utilities, and in other PRODUCTIVE ventures…instead of just burying their money in foreign banks or buying shiite cars….
Miller probably suffering from hot flashes like AC…
aparently that makes you miserable and cause you to talk a lotta shiite…
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there mr bush shit go again with his usual role as dictator making sure that all remain living in grass houses and riding donkey cart style
this guy fuh sure knows how to wrap dog shite in candy wrap and sell it as toffee
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@Bush Tea
All of our policies are informed by economic considerations. Changing behaviour is never factored. Take a look at the losing battle we are having on the non communicable diseases front.
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@ David
All of our policies are informed by economic considerations. Changing behaviour is never factored…
++++++++++++++++++++++++
Is that not typical of brass bowl beggars?
Always – “…skippa – gimme a dollar to buy some food”
Never – “Boss show me how I can change my behavior so that I can earn my food”
You are correct…. just look at the proliferation of fat, pot bellied, unhealthy looking people around, most with high blood pressure, diabetes, asthma, heart disease or a combination…. who spent their life watching TV and on fast foods, pork cutters, macaroni pie and rum, with the understanding that the free service at the QEH would take care of them….
…and don’t you know that the youth are even worse…?
eating TOTAL shiite, and staring all day and night at computers and cell phones like zombies…
Of course the politicians don’t want to change behaviors themselves. It seems like they all were intent on getting elected so that they could take this mendicant behavior to the limit. They all now look like stoute and simmons from the olympic association…..sick, big bellied old men clinging to power….
Of course you know that Tom Adams was a master at using taxes to influence behavior???
From the credit union savings to foreign exchange management ..he understood how to influence brass bowls….
…plus he knew how to deal with people like AC…..
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@Bush Tea
The taxes Tom Adams imposed on the minibus sector, has it worked?
On 10 March 2015 at 11:40, Barbados Underground wrote:
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Look Bushie
Stop groping and non-wacking do!…….What does all this have to do with the price of cheese?. Face facts Mr. Outback…. the old method is cumbersome and not working as people no longer have adequate cash flows… to find $1200 in insurance and $400 x 2.Road tax IN LUMP SUMS like before…..even the Insurance companies have recognised this and have allowed monthly payments. Time Govt also give consideration to reality….People’s wallets are under real duress and allowing gradual payments is the way to go !
D sea-cat woman endorse this submit. LOL
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Of course it worked.
Kept them poor as ass.
Can you imagine the chaos they would have caused in this place if they had been making lots of money AND been as undisciplined as they are…?
Shiite man…. the ZR people would have been bigger than the mafia..
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@ Onions
If your pocket is under stress why don’t you catch the damn ZR…?
Who determined that you should have the right to drive bout a Japanese car on Trickidad gas when you don’t produce one shiite except hook a few jacks every other weekend?
The government got buses for poor people.
Besides. You need to keep your pooch at home when the night come …and keep from around the sea cat woman place after midnight…. THAT is why you need a car…ent it?
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Deal wid the matter on hands do…….what catch bus what….if evabody put down dey MOTTA-car and catch bus…..where will this newly created $75 Milllion deficit in revenue come from?
Ps. D sea-cat woman got transport buddy…..doan study it!
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@Onions
You like many others are driven to feed the beast. If demand for fossil consuming behaviour dropped significantly there would be a commensurate decease in dollars needed to finance programs to generate forex.
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@ Bush Tea March 9, 2015 at 10:18 PM #
“Hants: Don’t mind menopausal Miller…
Bushie agrees with your “Layman’s opinion”.
There is more to road taxes than collecting dollars.
There is also the opportunity to influence habits and trends.
Bajans are the kinda brass bowls that prefer to buy expensive show-off cars rather than invest in their future through buying shares, stocks etc. Road tax is an opportunity to make it more DIFFICULT to do that kinda shiite….
By charging LOTS more for large ridiculous luxury cars;
by forcing owners to make an annual trek to the Pine…
by forcing owners to pay annual registration fees
by insisting on insurance coverage
…we can hopefully influence behaviors….”
Bush man, here is a response from a ‘post-menopausal’ miller who has transformed into a piece of intellectual bush ‘shite’.
The first question to you is why is the present system not working?
Why are there approx. 30,000 untaxed uninsured vehicles in tiny little 2×3 Barbados (not my estimates but those coming from a senior law enforcement officer sometime back)?
I was just offering constructive criticism to the alternative system proposed by the BCCI and by pointing out loopholes especially when it comes to policing the compulsory third party insurance requirement of the RTA.
As for your other so-called benefits of the existing system in “influencing behaviours” they can be achieved by means other than continue with an obvious inefficient and indeed defective system of collecting road tax.
But, then again, you can argue it is not the ‘old’ manual system per se but the brass bowls operating the system. And you may be right about their overabundance existence in this ‘over-educated’ book-learnt country of incestuous jackasses of the Leroy Parris persuasion where the politically connected and known associated to corrupt politicians and top-brass bureaucrats are given a free pass.
“By charging LOTS more for large ridiculous luxury cars”:
Why not achieve such at point of importation?
I have always argued that any vehicle for private use in excess of 1,600.cc should be subject to a Large Ridiculous Luxury Tax. No need for such large engine vehicles in already congested polluted Barbados.
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@ David
Onions should
…either reduce demand for forex OR INCREASE productivity and forex earnings…
…and stop talking shiite
Onions…
Think the sea-cat woman got that car fuh you to drive? … ya joke….
It is just fuh you …..TO PAY FOR…!
Bushie NOW seeing your plight….
…can’t afford to pay fuh your car, de wifey car, AND the sea-cat woman car …so you looking fuh a little ease…?
…and plus you poor as a church mouse til the BLP get back in…..
LOL ha ha ha
your ass is grass skippa…. 🙂
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Whether I catch ZR or TB bus, the ‘beast’ will be fed…..forex will be spent. Unlees I walk….dammm, think of D ole man nuh. Why if Carri cud drive bout ee Benz and Blackie a Audi…. why allow me my 1986 Carina nuh. At least I ent nah robba…still toiling on the high seas for a living and feedin Bajans
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Up til now……nobody ent say why gasoline went up by 4 cent a gallon. NOBODY.
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@ Miller
steupsss
Why are there approx. 30,000 untaxed uninsured vehicles in tiny little 2×3 Barbados
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
… same reason that NOTHING works bout here. You and your political chums are all incompetent brass bowls who could not sell snow cones successfully at Kadooment….
Shiite man…. if wunna can’t collect VAT …what makes you think wunna would collect road tax from the gas stations?
Bushie knows that you support the Large Ridiculous tax…. but do you think that makes ANY difference to a man like Bizzy who just get Millions in shiite-tax money FREE from Stinkler? ….or to Bushie ? 🙂
Let him haul his ass up in the Pine and pay each and every year…
…at some point we will get a competent police commissioner who will ensure that road users comply with the law….
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Look Bushie
U see that figure of 30,000 vehicles un-registered……I bet U half of dem is old cars parkup in garages wanting parts…..but like evating bout tis Govt, they do lousy accounting work….Common sense here now…..tell me how many ole cars can one see on the roads nowadays?……evabody got 2000 and up nearly….check also and see the number of ole cars park longside D road but still wearing license plates…..Go check for nuh selves!
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@ old onion bags March 10, 2015 at 4:54 PM
OOB, you seem to know your onions for real.
So that figure of 115,000 used by lying Fumble to justify the imposition of tuition fees possibly includes that 30,000? If so, is he not only misleading Parliament but also the ignorant public?
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old onion bags March 10, 2015 at 4:54 PM #
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You may be surprised how many of those ‘ 2000 and up nearly’ cars which are not paying tax,and some of the owners are lil boys from de village. Its a similar story to the Income Tax , VAT and NIS funds. The untouchables, the thieving Thompies.
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That should have read ” are not lil boys………”
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