Hypothecated taxes - that is, taxes earmarked for specific purposes - are not generally popular with governments. They limit the freedom to allocate tax revenues according to the government's view of the national interest; they can warp priorities and focus undue attention on a few areas of spending at the expense of others that may be less visible; they encourage members of the public to think they can opt out of paying for certain items; they are an invitation to pressure groups; and there is no obvious criterion for deciding which items in the budget should be treated in this way. Governments feel, on the whole rightly, that one of the tasks for which they are elected is to reconcile competing calls on public money.
There are, however, countervailing arguments. The mechanisms for holding British governments accountable for the details of their expenditure are relatively weak. Budgets here do not get the public and parliamentary scrutiny that they deserve, and that they get in some other countries. Nor is the British public sufficiently informed about choices that must be made in allocating resources. The culture of the free lunch, the belief that more can be spent on one good cause without taking something away from another, is still surprisingly prevalent. Any measure that increases transparency, accountability and public understanding of the decisions that governments have to take should be welcomed.
At the moment the issue is confused by inconsistency. National insurance contributions do not go into a national insurance fund. Revenue from the road tax is not spent on roads, which are, however, indirectly subsidised in ways that the railways, their competitors, are not. The television licence fee is a compulsory levy allocated to only a small sector of broadcasting.
Subsidies for the coal industry would be little clearer, since the mines are entwined in the broader complexities of a mismanaged energy policy in which the real, long-term costs of coal have been obscured by a rigged market. Nuclear energy is heavily subsidised and the underlying economics of gas- powered generators remain a subject of argument. Nor is the choice purely economic, since the strategic risks of long-term dependence on external sources of energy must also be considered.
Nevertheless, if the decision is taken to keep open mines that seem unlikely to have an economic future in deference to public opinion, there would be some educational value in putting the price on electricity bills. By keeping the issue in the public eye, the Government would also put itself under pressure to conduct continuous scrutiny of its policies. The principle of greater transparency could also be extended. Few voters read official publications. There is no reason why central government should not provide individual taxpayers with a detailed breakdown of how their money is being spent in the same way that local governments now do.Reuse content