HC Deb 19 December 1944 vol 406 cc1624-6

The following Question stood upon the Order Paper in the name of Miss WARD:

51. To ask the Chancellor of the Exchequer, whether he can now make a statement on the revision of motor vehicle taxation.

The Chancellor of the Exchequer (Sir John Anderson)

As I think you are aware, Mr. Speaker, I had intended to reply to Question No. 51, and to ask leave to make a statement at the end of Questions. Perhaps I may, with your permission, make that statement now, Sir.

My Noble Friend the Minister of War Transport and I have carefully considered all the views placed before the Government on the subject of post-war motor vehicle taxation. We have also taken into consultation the President of the Board of Trade in view of his special concern in this matter. We are very grateful for the assistance we have been afforded by the very full and informative memoranda which we have received from the bodies specially interested from their various angles in this subject.

As it is important that the industry should be aware of the Government's intentions as early as possible in order that they may take them into account in framing their plans, I think this is an occasion when I should make known the conclusions we have reached in advance of the Budget and associated Finance Bill in which the necessary provisions will be incorporated.

We have reached the conclusion that there is no sufficient case—anyhow at the present time—for making any shift of duty between the vehicle and its fuel or for introducing any new form of taxation on the vehicle such as a tax on value. But we have concluded that there would be appreciable advantage in altering the basis of calculation of licence duty on cars taxed on horse power by proceeding with reference to the cubic capacity of the engine instead of the area of cross-section of the cylinders. While the amount of duty charged must, obviously, be a matter for consideration from time to time in the light of circumstances, the immediate change would be arranged to produce approximately the same amount of revenue as would be received on the present basis. The rate to secure this result would be the equivalent of £1 per 100 cubic centimetres of engine capacity (subject to a minimum).

I contemplate that these changes would come into force—subject to statutory authority being obtained—on 1st January, 1946, but it is a matter for further consideration in discussion with those concerned whether the new rates should apply universally after that date or alternatively only to vehicles which are first registered after that date. In the case of omnibuses and coaches and goods vehicles, we propose to introduce scales which progress by one seat and ¼-ton steps respectively.

Miss Ward

Could my right hon. Friend say whether those decisions are acceptable to motor-car manufacturers; and whether this will enable them to compete in the export markets of the world?

Sir J. Anderson

The main decision I have announced is, I think, the one major point on which a practically unanimous view was expressed in the memoranda which were submitted to me. Perhaps I may be allowed to add that there remains one point in regard to the spacing of the steps in the graduation of the tax. While I take the view that it might be disadvantageous to space those steps as widely as has been suggested in some quarters, I think there would be an advantage in making the scale rather more flexible than would be the case if the steps corresponded to each 100 cubic centimetres. That is a point to which I am ready to give further consideration.

Sir John Wardlaw-Milne

Can my right hon. Friend say whether the motor trade generally will be satisfied with the change coming into operation a year hence? Does that meet the possibility for development of the trade?

Sir J. Anderson

I gather so, yes.

Mr. Bowles

Can the Chancellor say whether it means a saving to the public who run cars, or not?

Sir J. Anderson

I thought I had made it clear that the arrangement will be so designed, in the first instance, at any rate, as not to involve any loss of revenue, and, therefore, I think there will be no saving to the public.

Mr. Benson

As the right hon. Gentleman has done practically nothing whatever towards helping us in the export market, will he see to it that he decides rapidly whether he will give larger steps in taxation?

Sir J. Anderson

My hon. Friend will appreciate that that is a point on which there is not, at present, unanimity among important sections of manufacturers.

Mr. Benson

Naturally, the manufacturers are all in favour of the present method of taxation. It gives them magnificent protection.