§ `In subsection (2) of section 52 of the Finance Act 1972 (car tax) after the words "10 per cent. of" there shall be inserted the words—
- "(a) in the case of a caravan, three-fifths of its wholesale value; and
- (b) in any other case".'.—[Mr. Bruce-Gardyne.]
§ Brought up, and read the First time.
6.30 pm§ Mr. Bruce-GardyneI beg to move, That the clause be read a Second time.
The purpose of the new clause is to reduce the value for car tax of a motor caravan to 60 per cent. of the value which would otherwise apply under section 52 and paragraph 11 of schedule 7 to the Finance Act 1972. This will exclude from the value for car tax the element of the cost of the vehicle which relates to living and sleeping accommodation and associated fittings present in a motor caravan. Trailer caravans are not subject to the tax.
I remind the House that, since 1975, motor caravans have been chargeable vehicles for car tax purposes under section 52 of the 1972 Act. The effective tax rate on such vehicles is therefore 24.6 per cent.—that is, car tax at 10 per cent. and VAT at 15 per cent. It has been drawn to our attention, and was argued strongly on behalf of motor caravan manufacturers, that this compares unfavourably with the taxation on trailer caravans which, as the House will know, are subject to VAT only. Up to 1975, the disparity had been the other way round. Trailer caravans were then liable to VAT at the higher rate of 25 per cent., whereas the motor caravan was chargeable with car tax at 10 per cent. of wholesale value plus VAT at the standard rate, which was then 8 per cent. The abolition of the higher rate of VAT and the raising of the standard rate to 15 per cent. in June 1979 tilted the balance heavily against the motor caravan.
The point was put to us that it is unfair that the caravan content of the motor caravan should bear car tax when it would not do so on a trailer caravan. It is, therefore, proposed in the new clause to exclude this element from 691 the value for car tax purposes of the motor caravan. We accept that a fair case has been made for a concession to the industry, which has gone through considerable difficulties during the past 10 years. While we do not accept that the incidence of car tax was a major factor in those difficulties, we accept that it is a fair point that the existing treatment has been somewhat inequitable between the motor caravan and the trailer caravan.
I therefore commend the new clause to the House. I believe that it will be of value to the industry, and is justifiable on that ground.
§ Mr. Robert SheldonWe welcome the new clause. It is clear that motor caravans have been taxed more than they should have been for a long time now. Of course, they are not quite as common in this country as they are, for example, in the United States. We recognise, too, the element of holiday travel, which is probably on a par with showmen's vehicles, on which we deliberately impose a lower rate of tax because we realise that they are not on the road all the year. Nor are motor caravans. This is therefore a useful new clause, and we give it our blessing.
§ Question put and agreed to.
§ Clause read a Second time, and added to the Bill.