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June 19, 2005 || 10:50 pm

On taxes....

I just read this interesting post about Denver's new light rail system. There much be lessons for London in this one - why do we find it impossible to get our schemes for trams/dedicated bus routes built when they have managed to with such success? One reason is obviously in the way that London raises money as opposed to over here, where the electorate can vote on whether they want an extra tax that goes into a dedicated, ringfenced pot for transport. Who wouldn't vote for this in London? Well, we might argue that we are already being taxed enough already and why can't the government fund it without an extra tax.

But I would like to see Ken stick two fingers up to Westminster, tell Londoners that this is his only option because central government has wrecked his chances with the Tube, and and propose a tax for above-ground transport which we can vote on as a London referendum. Denver (pop. 2.1 million) voted to raise $4.7 billion - what could London's 7 million inhabitants vote through? Then Ken could invest the money with his own stringent performance indicators for whichever construction companies get the contract, and we can watch the Tube get mired in its PPP mess while we take the tram to work. (Or something.)

But really, I do think that we could learn from the US style approach to taxation. I remember talking about this with my friend Peter a while back, on the subject of how you manage garbage collection and recycling. In the US you see a direct relationship between the tax you pay and the service you get. This ends up being unfair, for example in relation to education, because a poor county like this one can't raise enough tax revenue to manage its schools properly and the rich ones resent paying for the education of the poor (as they send their kids to private schools) so vote against any proposed tax increase.

But the power to raise a special tax for something like transport, which is put to a popular vote and therefore validated, seems to me to be a powerful way of educating voters about where their tax dollars go and what demands they make of the government as a result. If, to take the garbage example, you paid per kilo for the removal of your rubbish, and you got a rebate per kilo that you recycled, then clearly you would recycle more. Similarly, if the government allowed you to vote on whether you should pay an extra tax so that a new housing masterplan would be built, we would really find out some interesting things about urban renewal, and the level of public engagement with these debates would be forced to become higher. There might also be a higher expectation for delivery and less tolerance for waste - going over budget would mean you had to get a new tax voted through, so that would be real pressure on the authorities and contractors to get the job done.

Of course, here it doesn't always work that smoothly. Projects do go over budget and worthwhile initatives are not always voted through. But I like to know where my money goes and I like the idea that the electorate gets to validate these decisions separately and in a direct way, rather than as a policy package at each election. I think we could make it work to show consumers the true cost of their lifestyle choices because the level of public subsidy for each thing we do would be made clear. You want Heathrow Terminal 5? Here's a way you can vote for it. You want to lock up petty thieves for longer? Well, vote for the tax money that will pay for it.

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