HC Deb 09 February 1984 vol 53 cc1013-4
13. Mr. Hal Miller

asked the Chancellor of the Exchequer if he will estimate the increase needed in excise duty on petrol to offset abolition of the special car tax.

Mr. Hayhoe

To offset the abolition of car tax, the average price of a gallon of petrol would have to be increased by 14½p, made up by 17 per cent. on the excise duty plus the consequential increase in VAT at the standard rate.

Mr. Miller

Is my hon. Friend aware of the widespread feeling that it is unjust that the product of this one industry should be subject to a capital tax when it is one of the largest employers, and one of the largest contributors to the national income? What is the justification for a tax on capital rather than on use of the product?

Mr. Hayhoe

I appreciate the point to which my hon. Friend draws attention. Of course, he is well known in the House as someone who is particularly concerned about the prosperity of the car industry. Last year car production rose to above 1 million, and car exports in the fourth quarter of last year were up by about 40 per cent., a commendable record.

Mr. Kirkwood

Is the Minister aware of the severe ramifications that any increase in the excise duty on petrol has on rural areas? May we have an assurance that that will be taken into account in any proposed increases?

Mr. Heyhoe

I am sure that all aspects of this matter will be taken into account by my right hon. Friend.

Mr. Bill Walker

Is my hon. Friend aware that in rural areas people use their cars because they have no option—because there is no public transport—and that they are usually secondhand cars? Is he aware, therefore, that any increase in petrol tax would be penal and regressive in the rural areas?

Mr. Heyhoe

I understand that, of course, as does my right hon. Friend, and my hon. Friend makes the point in a powerful fashion.