Taxation and Improvement in the United Kingdom - Essay Example

Taxation Table of Contents The Proposal 3 Critical Evaluation of the Proposal 3 Recommendations 6 References 10 Bibliography 12 The Proposal The proposal was developed by Amanda Shmit, MP and the leader of the Junity Party when she was unable to be present at the desired place due to certain problems related to the air transportation and certain services that was not being rendered to her due to the dismal scenario of road transportation. She thought of amending the transportation tax system and wanted to bring a proposal for adding ‘1p per mile’ to all transports in order to pay for the purpose of improvement in United Kingdom. Critical Evaluation of the Proposal The proposal is of increment in the tax rate of 1 p per mile in the transportation for the development of the transportation system to deliver the service at right time. For this the taxation system of the transportation system needs to be evaluated in the UK in order to conclude the actual potential of the recommendation for the proposal. There have been different taxation systems in the UK transportation especially for the new mode of registration tax and fuel tax. Through this there has been increase in the revenue collection of the UK Government that is utilised for the development of the transportation system. This increase is well illustrated below: Source: (PSI, 2003). Due to the new developed taxation there has been increase in the revenue, but the increasing fuel pricing and taxation are the biggest threats toward the taxation related to transportation. The proposal was developed when Amanda Shmit was unable to get certain services due to transportation system in the UK. The fact is that there is already a huge amount of tax imposed upon the aviation sector in the UK and any further increase would not be feasible enough. From the UK Air Passenger Duty (APD), there have been total receipts of £864 million in 2004 and this fund was utilised for the development of the infrastructure in the UK (IATA, 2006). The tax and charges by the transportation mode and spending in the infrastructure of the UK in comparison to other European Nations are illustrated below: Source: (IATA, 2006). The aviation sector is the highest tax collecting mode than other sectors. Now additional ‘1p per mile’ will increase the burden in the aviation sector and there will be additional taxation for the consumers, which is not a positive sign. The UK Government is more focused upon the ‘Carbon Tax’ that has gained importance in recent times. The 1 p tax increase per mile seems to be another taxation system that does not align with the carbon taxation (Zimmer, 2008). The current transportation sector tax is utilised for different purposes. The increase in the burden of taxation will not solve the problems; instead it might provide rise to evasion of certain transportation tax. The utilisation of the road transportation of the UK is illustrated below. Source: (Jones, 2010). The Government of the UK through the current taxation system from the transportation has been able to focus more upon the improvement part that will take longer period of time to develop. Recommendations The proposal recommended by Amanda about the taxation for the evaluation of the taxation system of the UK Government related to the transportation sector is not a good option. This will increase the burden over the sector and it is not possible to exactly determine the miles travelled and levy taxes accordingly. There was a proposal by the Treasury of the UK in increasing the APD in two stages in November 2009 as well as in November 2010. This proposal was highly criticised and there were campaigns against these rises. This was a similar kind of scenario as it may turn out to be if the proposal is implemented and the proposal of new tax for per mile travelled can become subject to many problems (Unite, 2008). The Government of the UK is focused upon the modernisation procedure and also on technical advancement in the transportation sector for managing the cost and to produce better outcome with the similar taxation system that exists (Andrews & Et. Al., 2004). From the data of the UK transportation system, according to per day with average hours utilised and for the purpose of the transportation, it can be viewed that the proposal will increase the taxation that will tend to increase the fares, which will be a direct hit on the consumers. The figure illustrated below is about the transportation system per day for average hours and for the period of 2002 to 2004 in the UK. Source: (Jones, 2010). From the above data, it can be comprehended that the maximum travelling done are for the purpose of education and increasing ‘1p per mile’ will increase the tax upon the academic community that consists of students, teachers, professors and others associated with the education sector in the UK. There has already been increase in the taxation in the UK transportation related to the environment popularly known as environmental tax. The increase or addition of ‘1p per mile’ of tax will not be suitable enough for this sector (Bower, 2004). The UK Government is more focused upon the carbon emission and has included this in the tax system in transportation through which there is increase in the revenue and this is utilised for the development purpose. This government initiative is one of the recommendations, which is supported in this overall analysis. This will create better environment and assist in the development of the transportation system (Laurent, 2009). The different types of taxation system that are present in the UK transportation context are enough to collect revenues and utilise it for the development purpose. The Vehicle Excise Duty (VED), fuel taxes and other taxes associated with the transportation are the better taxation systems related to the UK tax policy. The proposal of increase in ‘1 p per mile’ in transportation is not a good idea and the whole proposal should be abandoned and the UK recent taxation policy towards environment and development is the best suited policy (Leicester, 2006). References Andrews, J. O. & Et. Al., 2004. Redesigning the National Airspace System for Sustainability. Princeton University. [Online] Available at: http://www.princeton.edu/~stengel/STF-FinalReport.pdf [Accessed January 31, 2011]. Bower, J., 2004. Carbon and Congestion: Can HM Treasury Save the White Paper. Oxford Institute for Energy Studies. [Online] Available at: http://www.oxfordenergy.org/presentations/CarbonAndCongestion.pdf [Accessed January 31, 2011]. IATA, 2006. Economic Briefing European Aviation Taxes. Airlines. [Online] Available at: http://www.iata.org/whatwedo/Documents/economics/EU_Taxation_June_06.pdf [Accessed January 31, 2011]. Jones, O., 2010. Moving Transportation Reform: An Inside Perspective from the U.K. Brooking Institution. [Online] Available at: http://www.brookings.edu/~/media/Files/rc/papers/2010/0525_united_kingdom_transportation_jones/0525_united_kingdom_transportation_jones.pdf [Accessed January 31, 2011]. Laurent, E., 2009. An Ever More De‐Carbonated Union. Harvard University. [Online] Available at: http://www.ces.fas.harvard.edu/info_for/visiting/papers/VSS_ELaurent_9-23.pdf [Accessed January 31, 2011]. Leicester, A., 2006. The UK Tax System and the Environment. Institute for Fiscal Studies. [Online] Available at: http://www.esmeefairbairn.org.uk/docs/tax_system_environ.pdf [Accessed January 31, 2011]. PSI, 2003. Road Fuel Gases and Their Contribution to Clean Low-Carbon Transport. Department for Transport Road Fuel Gases Consultation. [Online] Available at: http://www.psi.org.uk/ehb/docs/potter-progressreport-200310.pdf [Accessed January 31, 2011]. Unite, 2008. Aviation Taxation Facts. British and Ireland Union. [Online] Available at: http://www.unitetheunion.org/sectors/civil_air_transport/aviation_taxation/aviation_taxation_facts.aspx [Accessed January 31, 2011]. Zimmer, M. J., 2008. Carbon Tax: Ready for Prime Time. Sustainable Development Law & Policy. . [Online] Available at: http://digitalcommons.wcl.american.edu/cgi/viewcontent.cgi?article=1185&context=sdlp [Accessed January 31, 2011]. Bibliography Ellman, L., 2009. Taxes and Charges on Road Users: Sixth Report of Session 2008-09, Report, Together With Formal Minutes, Oral and Written Evidence. 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