Company Cars

HC Deb 10 May 1984 vol 59 cc1070-1

5. Mr. Hal Miller

asked the Chancellor of the Exchequer what representations he has received since the Budget on the increase in tax on company cars.

Mr. Moore

Since Budget day my right hon. Friend has received 40 letters and representations on this subject.

Mr. Miller

Does the Minister understand the widespread resentment among salesmen and managers over the special tax treatment of a tool of their trade as a perk, especially when so many other perks go untaxed, such as coal for miners and travel concessions? Will he therefore examine the possibility either of introducing a staged tax relating to the number of miles of business use, or of putting an upper limit on this seemingly unending increase in taxation?

Mr. Moore

I am always ready to consider points made by my hon. Friend, who has a tremendous interest in and commitment to the car industry. However, the benefits concerned are quite obviously seen in advertisements as being attractive. For example, today a basic rate taxpayer receiving from his firm a 1600 Sierra would pay tax of £144 a year on that benefit, which does not seem to be the real value. We are seeking to move towards realistic levels of all benefits as regards their tax equality with ordinary cash remuneration.

Mr. Park

When will the Government stop using the car industry as a milch cow? The Government continue to allow adverse tariffs against our exports, a to apply a special tax only to cars and motor bikes, and to tax customers who, in the main, buy British cars. When will the Government change their policy?

Mr. Moore

In so far as the question relates to the taxation of perks on cars, I have covered the relatively low taxation in relation to the value of the perk. However, I am sure that the hon. Gentleman would want to join us in welcoming the enormous current success of our car industry and, like him, I would encourage people to buy British cars. Car production in 1983 was over 1 million for the first time since 1979. I am sure that hon. Members on both sides of the House will welcome that, as well as the successful launch of the Metro, Maestro and Montego, and the fact that BL's productivity is now comparable, again, with the best in Europe.

Mr. John Townend

Does my hon. Friend agree that these tax changes bear heavily on middle management, who are so vital to our industrial recovery? Does he accept that this increased burden would be much more readily acceptable if the Treasury was even-handed in its taxation of perks? Is there not particular resentment that coal miners' free coal is not taxed? May we assume from his earlier reply that my hon. Friend is considering taxing those other perks in future Budgets?

Mr. Moore

The Government's policy is quite clear. Let me remind my hon. Friend of what I said a few moments ago. Our policy is to move gradually towards realistic taxation of perks to ensure that all benefits in kind are taxed equally with cash remuneration.

Mr. Hoyle

Will the Minister ask his right hon. Friend the Chancellor whether he will receive a delegation from

the United Commercial Travellers Association section of ASTMS, which regards the representative's company car as a tool of the trade and believes that a vigorous, hardworking section will be severely handicapped if the tax is increased?

Mr. Moore

I have acknowledged the point of my hon. Friend the Member for Bromsgrove (Mr. Miller), and I recognise the aspect of the question to which the hon. Member has addressed himself. If approached by delegations, I shall certainly consider what is obviously an important topic to those who regard company cars as a vital tool of their trade.