§ I now turn to tax instruments which affect particular sectors of industry, beginning with the taxation of motoring. One way in which the Government must demonstrate the priority they give to manufacturing industry is by forgoing changes which might otherwise have been desirable if they are likely to inflict damage on important sections of industry.
§ As the House will be aware, the Government have been considering the possibility of abolishing vehicle excise duty on passenger cars and recouping the lost revenue by raising the tax on petrol. Since I rejected this change a year ago, I am bound to confess that it has appeared increasingly attractive when looked at in isolation from its industrial consequences.
§ But in reaching a decision I also had to take account of the powerful industrial arguments which point to retaining the duty. To abolish it and make a compensating increase in petrol tax would immediately encourage people to change their present cars for smaller ones, or at least to prefer a smaller model when the time comes to buy a new car, and it is amongst the smaller models that our car industry is particularly vulnerable to imports. I cannot make a change, whatever its merits on other grounds, which would further expose us to imports of foreign cars and to the loss of jobs in 255 our own industry. On these grounds I have decided against abolishing the duty. Our industrial policies must have first priority.
§ I propose, however, to make some minor changes in the relevant legislation. In particular I am altering the criteria for exemption for disabled passengers, because the mobility allowance scheme was designed to supersede other forms of mobility assistance to the disabled.
§ Again reflecting the priority we must give to industrial policy, I have decided against relaxing hire-purchase restrictions on motor cars in present circumstances since this would be most likely to stimulate imports. The Government have, however, decided to abolish hire-purchase restrictions on motor caravans, where similar considerations do not apply. An Order will be made by my right hon. Friend bringing this into effect from midnight tonight.