§ Motor vehicles have been the subject of long Debate and much conflicting expression of forcible opinion. Last April, my predecessor announced the conclusion that he had reached as the result of a long and thorough examination of the Motor Vehicle Duty; but, in view of the need, as it was considered, to accelerate the General Election, a place was not found for the necessary Clauses in the Finance Bill. The subject has therefore remained open for debate and decision until now. I am keen to settle the matter.
§ I have received many representations, and a good deal of conflicting advice but the arguments reduce themselves to two or three clear issues.
§ First, it is claimed by some that the total weight of taxation on motor vehicles, however assessed, should be reduced. I cannot agree to this at present. There are many other claims for tax relief which I must put in front of this one. I must, therefore, restrict myself to alternatives which raise about the same sum of money as at present, for motor taxation in the aggregate.
§ The issue then arises of the distribution of the taxation as between the vehicle and its fuel. Here there is naturally a great clash of views. One method will pay one person and another arrangement will pay another. Users of different classes of vehicles would be very differently affected by any shift of taxation of this kind. Any significant shift of duty from the licence to the fuel would, in particular, be substantially to the disadvantage of those making heavy use of the roads, a class whom, in the general interest, I should not wish to discourage. It is true that there might be an extension of drawbacks for particular classes of user, but extension of drawbacks for particular classes is, administratively, very troublesome. It absorbs a lot of man-power and woman-power which could better be employed on some other job, and it would also, I fear, benefit the black market at the expense of the Exchequer.
1889§ As regards the private vehicle, it is argued by some that a substantial transfer of duty from the licence to the fuel would lead to greater freedom of design, to bigger cars on the roads here at home, and to home production which would be a better base on which to build up an export trade. These arguments are put with great persistence and eloquence; but I doubt, and so do many motor manufacturers, whether there is really very much in this line of thought. I have therefore reached the conclusion that I must leave the distribution of taxation as between the Licence Duty and the fuel substantially where it is. But this leaves open a further question of importance—how shall the Licence Duty be assessed, on the assumption that there is no shift between the vehicle and the fuel and on the assumption that the total revenue which is to be received remains substantially the same?
§ For goods vehicles, omnibuses and coaches, I am proposing to make a certain modification of the arrangements. I propose to introduce steps of a quarter of a ton and of a single seat respectively. The details will be found in the White Paper.
§ As regards private cars there is, I think, general agreement that the present method of calculating horse-power according to cylinder bore should go. No one defends it. The cylinder bore, like other bores, has no friends. It is generally agreed that the tax, in. future, should be based upon the cubic capacity of the cylinders. A rate of duty of £1 per 100 cubic centimetres is, I am told, a rough equivalent of the 25s. per horse-power as at present. What remains to be determined is the number of steps in the scale of duty. I have found this very difficult to decide, as did my predecessor. The balance of argument is very level. Some argue for small steps, on the ground that this involves less disturbance of the manufacturers' freedom of design, and also that we should make as little change as possible in the present scheme of graduation. On the other hand there is the argument, for wider steps, that they would lead to fewer models being produced, better runs of production and lower costs. On these points the motor manufacturers are much divided.
§ My right hon. Friend the Minister of War Transport and I have carefully considered the matter, and we have felt 1890 bound to take reasonable account of the views expressed by the majority of the manufacturers, in favour of the small steps. The resolution which I shall table, and which will furnish the basis of discussion, provides, therefore, for small steps of 100 cubic centimetres, subject, as at present, to a minimum; but I shall be prepared to listen attentively, with at least a half-open mind, to any argument in favour of wider steps. We will take our final decision in the Committee, in the light of the balance of arguments adduced. The Committee will observe that, except on this last point—on which I think my predecessor was substantially convinced in favour of small steps; I frankly admit that my mind is not made up—I have reached broadly the same conclusions as he did on the subject of motor taxation. But I have stated the case at some length because I have given a good deal of thought myself to it at the Treasury. I do appreciate its importance to the motor industry and the importance of the motor industry to the country. The change in the case of goods vehicles, omnibuses and coaches will have effect on 1st January next. That on private vehicles will apply only to vehicles first registered after an appointed day, which we will make in due course.