Road Tax, Progress & Belarus

A road map for motoring taxation

Suggested by Sam Dumitriu, research director at The Entrepreneurs Network

Ahead of every Budget, the Institute for Fiscal Studies puts out its Green Budget. It sketches out the key policy choices faced by government and pushes important, but neglected issues onto the agenda. In their latest Green Budget, they look at taxes on motoring. It’s an issue important for three reasons, fiscal sustainability (they raise £40bn per year), productivity (congestion is a drag on it), and the environment (motoring is a massive source of carbon emissions).

They point out that the shift to electric vehicles, while a win for the environment will deprive the government of revenue (electric cars don’t pay fuel duty or road tax). As there’s still a need to fund the roads and to discourage congestion, the IFS calls for the lost revenue to be replaced with a system of road pricing where charges vary by time and location.

Though technologically feasible and tried elsewhere, it’ll be a tough political sell. But it’s got two things in its favour. First, it’ll be easier to replace fuel duty before there’s a large interest group of electric car drivers used to lower taxes. Second, while there’d be some ‘losers’ (drivers in congested cities), there’d be far more ‘winners’ (such as those driving long distances in rural areas).

How life sciences actually work

Suggested by Philip Salter, founder of The Entrepreneurs Network

Alexey Guzey thinks scientific progress in biology isn't slowing down. If he's right, this would be a vital corrective to the growing consensus that progress across the sciences is slowing.

Guzey writes: “Yes, funding agencies are risk-averse; yes, academia now selects for things you probably don’t want it to select for, like conformity and high conscientiousness; yes, an average scientist is not in academia for the love of science (and maybe the productivity of an average scientist is decreasing. However, all of this does not mean that science is stagnating or even that it is slowing down.”

In 2018, we had the first bionic hand, a new 3D bioprinting technique, and a method through which the human innate immune system may possibly be trained to more efficiently respond to diseases and infections, for example. And these three breakthroughs are just a snapshot of what happened in January.

Perhaps we can be more optimistic about the prospect for progress in our lifetimes. At the very least, Guzey provides an update to our template for how to think about the process of progress.

Insulating Belarus from external shocks

Suggested by Anthony J. Evans, professor of economics at ESCP Europe Business School

Pavel Kallaur, Chairman of the central bank of Belarus, provides a useful overview of the state of the economy in The Banker. Improving competitiveness has been a stated aim for Belarus over recent years, and my own research suggests that competitiveness has been improving in recent years. 2018 saw their inclusion in the Economic Freedom of the World Index for the first time, and they have since moved out of the "unfree" category.

Belarus Hi-Tech Park, in particular, has received a lot of attention. The lack of privatization in Belarus means that most private companies are start ups, and advanced payments technology has contributed to a blossoming tech sector. Success stories success such as Facebook-acquired MSQRD, and NYSE-listed EPAM are there.

Companies located in the park receive tax and social contribution advantages, but the zone is a virtual one – it isn’t a designated geographical area. This gives policymakers a lot of flexibility and interestingly last month officials touted the idea of Bulgarian companies joining the park.

Anthony has written here on the economic competitiveness of the Belarus.

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