§ The Chairman
The first Amendment in the name of the hon. and gallant Gentleman the Member for Renfrew, East (Major Lloyd) is out of order. The one in the name of the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) goes with nine others, and I suggest that they might be discussed together.
§ Mr. Jay
I beg to move, in page 7, line 42, after "vehicle," to insert:and other than a mechanically-propelled vehicle not exceeding ten horse-power which was registered under the Roads Act, 1920, for the first time before the first day of January, nineteen hundred and forty-seven).This Amendment is associated with others the purpose of which is to persuade the Government to give what we think is a justified relief to the owners of small cars registered before January, 1947. The Chancellor in his proposal has, we think, in trying to get rid of an anomaly in motor vehicle duty, in fact, created an injustice instead. What the Government have done, of course, is to impose a tax on all cars of £12 10s. per vehicle instead of the previous horse-power tax for the old cars, and £10 tax for the new cars.
Our Amendment, on the other hand, seeks to leave the pre-1947 small cars, that is 10 h.p. or less, in exactly the same position as they were before the Budget, 337 while leaving all other cars in the position in which they have been placed by the Chancellor's proposals. We do that on the grounds of equity to the owner of the old small car. I think that this is a case where there are only two considerations. One is equity between one owner and another, and the second is the desirability of affecting the design of newly-produced cars by the structure of the tax. As the latter consideration does not affect the pre-1947 cars at all, it seems that equity between one owner and another should be the prevailing consideration.
It was, of course, argued, and we have heard it before—and this year it appears to have prevailed with the Chancellor—that it was anomalous to have a tax of £10 a vehicle applied to all post-1947 cars, and a different system operating with the older cars. I believe that is a rather superficial argument; and when one looks at it more carefully, it is not nearly so plausible as it sounds. The suggestion was that to get round the anomaly a tax of £10 should be imposed on all cars, new or old. But on looking at it, this was found to mean sacrificing a revenue of £7 million to car owners.
It always seemed to us in previous years, and I gather the Chancellor agreed this year, that there was not really a case for selecting car owners for this particular relief of taxation in the present financial situation. Therefore, proceeding a little further with the argument, one asked if we were going to have a flat rate for everyone and no loss of revenue, what would the rate have to be. The answer to that, as the Chancellor told us in the Budget, was £12 10s. all round, and he has adopted that suggestion. In doing so, I think he has not carried the argument to the final stage, and that, if he had done so, he would have come to this conclusion.
The effect of imposing this £12 10s. duty, which has a sort of superficial administrative tidiness about it, is to raise the level of tax on the owners of old, small, pre-1947 cars; that is to say, the old 7 h.p. and 8 h.p. cars which were previously paying less than £12 10s. per year, and, at the same time, to lower the tax on the large, pre-1947 cars. When we look at it, that is very curious, and not so much anomalous as inequitable, because, generally speaking, the owners of small cars are people rather less well off 338 than the owners of large cars. Therefore, when we follow it out, we find that all that we are really doing here is to make a transfer between two groups of people owning these old cars for the benefit, broadly speaking, of the better-off owners of the large cars, at the expense of those not so well off owning the small cars.
Nothing whatever is achieved in the matter of affecting the design of newly-produced cars, which was the original purpose of the old form of tax on post-1947 cars, about which we are all agreed. We are all agreed that, in future, there ought to be a uniform system of tax for new cars, and that is not in any way altered by altering the incidence of the tax on old cars. Therefore, our proposal seeks to avoid this new imposition on the old small cars, which achieves nothing in the matter of design and is surely, in so far as a change is made, purely inequitable. We think one should look at the owners of the pre-1947 cars of 10 h.p. and less, and should say that there is no reason to increase the tax on them, but that they should be allowed to stay where they are.
This is really a very moderate proposal, and I cannot imagine that it would cost the Treasury any appreciable amount of revenue. I do not know just how much it would be, but I should have thought not more than a few hundred thousand pounds, anyway. I think it has everything to be said for it on grounds of equity, and I cannot see any objection to it. I hope that, perhaps, if not tonight, when we continue the debate, the Chancellor may feel that he can meet us, at least, so far.
§ The Chairman
I must apologise to the Committee. I said there were nine other Amendments to be considered with this one, but there are really only three.
§ Lieut.-Colonel Lipton
I make no apology for once again speaking on this particular topic, because, as far as my researches indicate, I have done so on exactly the same lines in 1947, 1949, 1950 and 1951. I can, therefore, claim on this issue to have been the most consistent of the hon. Members who have, from time to time, shown interest in this particular problem.
The Finance Act, 1947, provided that, in respect of cars first registered before 1st January, 1947, the tax should be 25s. 339 per annum per unit of horse-power. Cars first registered on or since 1st January, 1947, at present pay tax of £10 a year, irrespective of engine size. What the Government are asking us to accept is the end of the present dual system of motor taxation.
That, in principle, is something in favour of which many of us have been arguing ever since 1947, and the present proposal means that there will be a flat rate of £12 10s. applicable to all cars, irrespective of age or size. It would be out of order, on the doctrine of anticipation, if I endeavoured now to argue that that flat rate is too high, because there is another Amendment on the Order Paper in my name, which will I trust afford me an opportunity of saying a few words about that.
The point I wish to make now is that, in their attempt to bring about an abolition of the present dual system of motor taxation, the Government are now in effect increasing the tax on no fewer than 1,300,000 new cars. So far as I have been able to ascertain there are about 2,300,000 currently licensed cars on the roads, and the Budget proposal, which aims at equity, increases the tax on 1,300,000 of them. Many of them are post-war cars in excess of 1,000 c.c., and it may perhaps be argued that owners of such cars cannot complain as they are now on parity with owners of larger pre-war cars so far as taxation is concerned.
I should like to emphasise that nearly 700,000 cars of 9 h.p. and below will have their taxation increased, in most cases by £2 10s. a year, and further hardship will, in that way, be imposed on the smaller income group who are running small cars. In 1947, when the differentiation between pre-1947 and post-1947 cars was first introduced, my right hon. Friend the Member for Bishop Auckland (Mr. Dalton), who was then Chancellor of the Exchequer, said that when the amount had shrunk a little during a few years it would be an obvious point on which pressure might be brought to bear, and eventually when it became sufficiently cheap one which might be met.
The time has now been reached when the Financial Secretary to the Treasury might concede the validity of that particular argument. It so happens that in 340 1947, 1948, 1949, 1950 and 1951 attempts were made in the Committee to achieve the result we are now trying to persuade the Government to accept. The Financial Secretary will take no objection if I remind him of a very powerful speech which he made on this point on 22nd June, 1950, on the Committee stage of the Finance Bill. He actually moved a new Clause to amend the rate of Excise duty on private cars.
During that speech the hon. Gentleman made the kind of powerful contribution we have come to expect from him and I was so impressed by his argument on that occasion that I presumed to say soon after he had sat down that the Clause which he had moved was not without merit. I therefore hope that this evening he will find it possible to reciprocate by agreeing that this Amendment also is not without merit, because it is on all fours with the argument he adduced on that occasion.
I shall not weary the Committee with further quotations I could make from the speeches of hon. and right hon. Members opposite in support of this plea. It is accepted by most people, irrespective of party affiliations, that motor taxation is unreasonably high. This was so even before the increase recently announced by the Chancellor which we now seek to minimise. I am prepared to accept that there are many competing claims for any available tax relief, but considering the incidence of taxation now applying to this category of motorists running small prewar cars of less than 10 horse-power, I do not think they should be singled out for penal treatment now. It is quite clear that considerable hardship will be imposed upon this deserving section of the motoring community, and I hope that our advocacy will find some favour with hon. and right hon. Gentlemen opposite.
The present difficult situation arises because new cars have not been made available on the home market on the scale which was reasonably expected in 1947 when the £10 flat rate tax was introduced. Anyone who is fortunate enough to obtain a new car today is, if he obtains it legitimately, obtaining an asset worth very much more in the open market than the price he pays for it, and to that extent he obtains unearned incre- 341 ment. If the Government wanted to be logical they might think it worth considering a proposal that the Government should appoint themselves the sole selling agency for all new cars and sell these new cars at whatever price they could fetch in the open market, pocketing the difference between the price so realised and the catalogue price, including Purchase Tax, for which the car manufacturers are supposed to sell their cars.
I am sorry to say that the situation is now being exploited by the Government in order to realise more revenue from the owners of pre-1947 small cars who have been denied the opportunity of purchasing new cars, or who have, for patriotic or other motives, been content to run their old cars. I therefore hope that in all the circumstances the Government will be disposed to accept this Amendment.
§ Committee report Progress; to sit again Tomorrow.