HC Deb 24 May 1973 vol 857 cc640-3
3. Mr. Madel

asked the Chancellor of the Exchequer whether, in view of the price increase of petrol on 30th April, he will use the regulator to neutralise this increase by a compensating reduction in excise duty.

Mr. Higgins

No, Sir.

Mr. Madel

As there is evidence since 30th April that the oil-producing countries are pressing for a further price increase for oil, and as the price of petrol is such a sensitive factor in the cost of living, will my hon. Friend reconsider his answer with a view to bringing down the tax on petrol?

Mr. Higgins

There is perhaps a certain inconsistency between the two points made by my hon. Friend. He will agree that the matter is not as simple as one can express in a short supplementary question. However, it would be wrong to create any expectation that commercial price increases will be automatically offset by cuts in duty. I do not believe that would be at all in our national interest.

4. Mr. Sydney Chapman

asked the Chancellor of the Exchequer what representations he has received since 5th March 1973 requesting him to replace the duty raised by road fund licence by an equivalent increase in excise duty on petrol.

13. Mr. McCrindle

asked the Chancellor of the Exchequer what recent representations he has received since 5th March asking him to replace the revenue raised by road vehicle licences by an equivalent increase in excise duty on road fuel.

Mr. Higgins

Two, Sir.

Mr. Chapman

I hope that my hon. Friend will urgently ask my right hon. Friend the Chancellor earnestly to consider abolishing the road fund licence for private vehicles. If he did that and recovered the lost revenue by increasing the excise duty on petrol it would achieve certain desirable objectives. Anyone covering less than 10,000 miles a year would benefit net. The scheme would reduce unnecessary journeys and it would be a blessing to the environment.

Mr. Higgins

It will not have escaped the notice of the House that this Question is asking my right hon. Friend to do the opposite to what the previous Question was seeking, but I am afraid that he would not be able to go along with this idea either. The main effect of replacing the excise duty by increasing the duty on petrol would be to shift taxation from private cars to commercial vehicles, which would increase the price of goods in the shops and the price of our exports, and in the present situation I do not think that would be appropriate. To bring in the equivalent revenue would require an increase in petrol and derv of 8p a gallon, which would be substantial.

Mr. Molloy

There is reasonable evidence of a lot of tax evasion going on in this respect. Will the Financial Secretary therefore consider conferring with his right hon. Friend the Secretary of State for the Environment to seek to have a conference between the taxation authorities and the police to try to stop what is now becoming rife exploitation and cheating on the part of what would appear to be a large percentage of people who own motor cars?

Mr. Higgins

I am aware of the strength of feeling on the subject in a number of parts of the House. The question of enforcement was dealt with last week by my hon. Friend the Under-Secretary of State for the Environment, and enforcement is a matter for him.

Mr. McCrindle

Does not my hon. Friend detect a certain reaction in the country against what I would call the relative fiction of the Road Fund, which it appears is used progressively for many things in addition to road works? Does he not feel that the introduction of taxation which was charged according to road use would be more consistent with other taxes in this country?

Mr. Higgins

I must give my hon. Friend the traditional Treasury answer that we would not support the view that there should be hypothecation of revenue for particular purposes. As for the effect on road use, it is important to appreciate that, although there might be some short-run impact on road use by a price increase of the order I mentioned, the evidence is that the elasticity of demand for petrol is such that the longer-term effect on the amount of road use would not be very great, and it would not be an effective way of achieving that objective.

Mr. George Cunningham

In its report on urban transport the Expenditure Committee of this House recommended that the Government should seriously examine precisely this proposal. Does he not agree that it is contrary to social policy and sensible traffic policy these days to place a disincentive on people owning a car, and that what we really should do is to shift that disincentive to the use of the car for particular occasions?

Mr. Higgins

I understand very well what the hon. Member is saying. I do not wish to pre-judge our consideration of the views that the Expenditure Committee expressed about a further study of the shift of taxation from the annual licence to the petrol tax. Obviously it is right that we should always bear in mind recommendations made, and that we should consider them carefully. That is what we are doing.