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Rail Fares Too Cheap, Claims Tim Worstall Watch

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    https://capx.co/yes-theres-a-problem...heyre-too-low/

    I know there are a lot of people who get the trains. Thoughts?
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    The argument is sound, and deals with the whingers that believe heavy subsidy is right so somebody else is paying for their train ride too.
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    We should remove all rail subsidies and make the commuter pay the full cost of their train travel. This will encourage people to seek alternative forms of transport such as the car. The resultant increase in nitrogen dioxide emissions will cause an increase in deaths, predominantly among the elderly and ill. So not only have we elimated the cost of the subsidy to the taxpayer, but we have also elimated some of those that are an economic burden on those of us that work hard.
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    It is already cheaper for me to drive 200 bhp derv than taking train...
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    (Original post by Quantex)
    We should remove all rail subsidies and make the commuter pay the full cost of their train travel. This will encourage people to seek alternative forms of transport such as the car. The resultant increase in nitrogen dioxide emissions will cause an increase in deaths, predominantly among the elderly and ill. So not only have we elimated the cost of the subsidy to the taxpayer, but we have also elimated some of those that are an economic burden on those of us that work hard.
    Beautiful. Purge the wrinklies.
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    I was mildly surprised by the author's statement until I read his affiliation to the infamous Adam Smith Institute (M. Thatcher's favourite think tank). It advocates strongly for free market and argues that subsidy is bad, market will get price equilibrium. Frankly, the article misses basics of transport policy.
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    Isn't more people taking the trains more beneficial for the environment? As well as eases up congestion on the road networks, meaning those who NEED to drive are better off and we have less investment required in our roads. So in that sense subsidising public transport costs would make sense for the government.

    You could also argue it would make it more viable for people on lower wages to travel further for work, so can increase the area they look for work. Perhaps reducing unemployment in some areas with less jobs and a bit away from cities. (E.g. The valleys in South Wales). More people working = less on benefits and more tax income for the government. (And thus more money to spend on our country).
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    (Original post by Recont)
    It is already cheaper for me to drive 200 bhp derv than taking train...
    Exactly. Some people really do live in a bubble. The train service is abysmal and trains don't get cleaned properly, yet it is still one of the most expensive in the world. I for one cannot wait to start driving, yet those advocating higher fares would then have the nerve to either whine about congested roads when more people start driving or whine about unemployed benefit scroungers when some people can no longer afford public transport to get to work.
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    (Original post by Tcannon)
    I was mildly surprised by the author's statement until I read his affiliation to the infamous Adam Smith Institute (M. Thatcher's favourite think tank). It advocates strongly for free market and argues that subsidy is bad, market will get price equilibrium. Frankly, the article misses basics of transport policy.
    The ASI is a perfectly reputable think-tank. Calling it "infamous" doesn't seem a sound reason to trash the entire argument.
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    More people driving is the last thing we need.
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    (Original post by WBZ144)
    Exactly. Some people really do live in a bubble. The train service is abysmal and trains don't get cleaned properly, yet it is still one of the most expensive in the world. I for one cannot wait to start driving, yet those advocating higher fares would then have the nerve to either whine about congested roads when more people start driving or whine about unemployed benefit scroungers when some people can no longer afford public transport to get to work.
    The reason it's "one of the most expensive" is because of the cost structure. Most European railways have heavy government subsidies (which generally manifests as the poor subsidising the rich). Out government subsidies are net 3.5bn, the Germans have about 4 times that. The effect of this is that you as an individual user have to pay more, however it means all the non using tax payers have to pay less, they're only subsiding network rail.

    The other thing to remember is that, especially with longer distance travel, it appears more expensive because for some reason people pretend you only ever go one way on a train. When you get these analyses of cost they tend to look at one way travel, for which it can be rather expensive compared to our European neighbours (although also cheap if when you need to travel is more flexible), but the relative price gets slashed as soon as you turn that single into a return, and the price comes down to much nearer the continental average (which is also slewed down by eastern Europe) and these are the cost to the consumer, not the total costs.

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    (Original post by jape)
    The ASI is a perfectly reputable think-tank. Calling it "infamous" doesn't seem a sound reason to trash the entire argument.
    You forget, a think tank can only be reputable if it supports a massive state, unlimited borrowing, and sky high taxation, if jot it wants to kill the poor and can't be trusted.

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    (Original post by jape)
    The ASI is a perfectly reputable think-tank. Calling it "infamous" doesn't seem a sound reason to trash the entire argument.
    Does seem like a pretty shallow piece - from an ASI fellow (who'd have expected that?) - people driving cars or even walking down the pavement are using infrastructure that is paid for and maintained as a public good. he doesn't make any effort to show why it's OK to use tax money to fix potholes in the road* but wrong to subsidise other transport infrastructure.

    FWIW commuter rail is quite heavily subsidised in the USA - the MTA in new york is subsidised by about $7 per passenger journey, it's a really cheap system to use. in the heart of global capitalism it's seen as a price worth paying in order to get people into and out of work efficiently.

    *UK 'car tax' is not a ringfenced tax used to repair roads BTW
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    (Original post by Joinedup)
    Does seem like a pretty shallow piece - from an ASI fellow (who'd have expected that?) - people driving cars or even walking down the pavement are using infrastructure that is paid for and maintained as a public good. he doesn't make any effort to show why it's OK to use tax money to fix potholes in the road* but wrong to subsidise other transport infrastructure.

    FWIW commuter rail is quite heavily subsidised in the USA - the MTA in new york is subsidised by about $7 per passenger journey, it's a really cheap system to use. in the heart of global capitalism it's seen as a price worth paying in order to get people into and out of work efficiently.

    *UK 'car tax' is not a ringfenced tax used to repair roads BTW
    While the spend on the roads is not explicitly funded by vehicle excise duty and fuel duty, the cost is still covered (several times over) by these taxes. The cost of maintaining our road network, plus the capital spending, is only about £2bn. VED pays for this 3 times over, having about £6bn annual revenues. Fuel duty is even more significant, at £27bn it covers the costs over a dozen times over, all in all the motoring specific taxes are 1650% of the. If we take the higher road cost given by the RAC of 9.3bn it's still covered three and a half times over.


    Cost: https://www.gov.uk/government/public...ntenance-spend
    RAC FAQ (cost, fuel duty, VED): http://www.racfoundation.org/motoring-faqs/Economics


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    (Original post by Jammy Duel)
    While the spend on the roads is not explicitly funded by vehicle excise duty and fuel duty, the cost is still covered (several times over) by these taxes. The cost of maintaining our road network, plus the capital spending, is only about £2bn. VED pays for this 3 times over, having about £6bn annual revenues. Fuel duty is even more significant, at £27bn it covers the costs over a dozen times over, all in all the motoring specific taxes are 1650% of the. If we take the higher road cost given by the RAC of 9.3bn it's still covered three and a half times over.


    Cost: https://www.gov.uk/government/public...ntenance-spend
    RAC FAQ (cost, fuel duty, VED): http://www.racfoundation.org/motoring-faqs/Economics


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    Why alone of all activities that are taxed, should the benefit of motoring taxes be deployed solely towards the activity taxed?

    Nobody suggests that Air Passenger Duty should be spent on runways or the Insurance Premium Tax on the Financial Ombudsman Service.

    Don't motorists benefit from schools, hospitals aircraft carriers and Ethiopian girl bands?
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    (Original post by nulli tertius)
    Why alone of all activities that are taxed, should the benefit of motoring taxes be deployed solely towards the activity taxed?

    Nobody suggests that Air Passenger Duty should be spent on runways or the Insurance Premium Tax on the Financial Ombudsman Service.

    Don't motorists benefit from schools, hospitals aircraft carriers and Ethiopian girl bands?
    The point is that the revenues from motorists entirely covers the costs; the revenues from smoking entirely cover the extra costs to the NHS; they carry the cost to the system they're using and then chucking some more into other things that they and everybody else use because money for those things has to come from somewhere, and it's better politically to hide it in regressive taxes.
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    (Original post by Jammy Duel)
    The reason it's "one of the most expensive" is because of the cost structure. Most European railways have heavy government subsidies (which generally manifests as the poor subsidising the rich). Out government subsidies are net 3.5bn, the Germans have about 4 times that. The effect of this is that you as an individual user have to pay more, however it means all the non using tax payers have to pay less, they're only subsiding network rail.

    The other thing to remember is that, especially with longer distance travel, it appears more expensive because for some reason people pretend you only ever go one way on a train. When you get these analyses of cost they tend to look at one way travel, for which it can be rather expensive compared to our European neighbours (although also cheap if when you need to travel is more flexible), but the relative price gets slashed as soon as you turn that single into a return, and the price comes down to much nearer the continental average (which is also slewed down by eastern Europe) and these are the cost to the consumer, not the total costs.

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    Yet here we have cases of the rich subsidising the poor. For an instance: I have no use for the royal family and don't want any of my tax money going towards funding their lifestyle, but I don't have a choice in that. The train service is a service that anyone can choose to use, including drivers, and mainly used by those who have no other options. So this is more of an argument of what taxpayer money should or should not be spent on, as plenty of us are paying taxes for services and institutions that we have no use for in the first place.
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    (Original post by WBZ144)
    Yet here we have cases of the rich subsidising the poor. For an instance: I have no use for the royal family and don't want any of my tax money going towards funding their lifestyle, but I don't have a choice in that. The train service is a service that anyone can choose to use, including drivers, and mainly used by those who have no other options. So this is more of an argument of what taxpayer money should or should not be spent on, as plenty of us are paying taxes for services and institutions that we have no use for in the first place.
    Actually you'll find the railways to be the only major thing where statistically the richer you are the more money you're taking out of the public purse because the users are predominantly the middle class living in the home counties (and obviously the same deal around other urban centres). It's not the poor using the railways, they're already in the cities.

    Oh, and you'll find the royals effectively pay for their own lifestyle with a de facto 85% (temporarily cut to 75%) tax rate (100% tax with 15% returned 2 years later)

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    Ideologically driven stupidity. Take his money and get him to commute like a real person and see how quickly he withdraws support for the motion.
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    (Original post by Jammy Duel)
    The point is that the revenues from motorists entirely covers the costs; the revenues from smoking entirely cover the extra costs to the NHS; they carry the cost to the system they're using and then chucking some more into other things that they and everybody else use because money for those things has to come from somewhere, and it's better politically to hide it in regressive taxes.
    No that isn't the point, as my examples of Air Passenger Duty and Insurance Premium Tax illustrate. Excise duties are pure taxes. They pay for a part of total government revenue. They don't cover the burden to government of an activity and then provide some cream on top to pay for other activities. That never was the case and motoring lobby are the only people that think that should be the case. Petrol is taxed, not because roads cost money but because petrol, unlike wig powder, has price inelastic demand and is therefore a reliable source of substantial revenue.
 
 
 
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