Is the tax model broken?

I've been having discussions with people about the two types of tax structures we see in our country.

On the one hand, taxes (and contributions) from various sources are lumped into one big pot of revenue which the government doles out as it sees fit. It's dynamic, but critics suggest that when certain contributions (like EI in Canada, for example) become surplus to the point where they're funding almost everything but the resource they were created for, the model is broken. EI is a perfect example of this in our country (EI=Employment Insurance - for all you non-Canadians out there), where the EI fund reports billions in surpluses, yet EI benefits are laughable and eligibility is fraught with exceptions and hurdles.

On the other hand, we have a trend toward taxes being funneled to the most logical beneficiary. My example of this is cities lobbying for their share of gasoline tax, which would be put to use on roads and transit. It sounds like a great idea, but begs the question - we've succeeded in building roads and subways long before tax kickbacks to municipalities, so why do we suddenly need this extra money now? Are cities willing to admit that they're unable to manage the money they already have and are just looking for more handouts - having found a good sounding excuse?

I don't know which side of the fence I'm leaning on this one, but I see just as much of an opportunity for disaster with the second model. Agencies that deal with abused women could rightfully demand a cut of alcohol tax. Cancer centers could rightfully demand a cut of tobacco taxes. Banks could rightfully demand a cut of gambling taxes (since gamblers are very likely to go bankrupt). Where do we draw the line?

Food for thought.