§ 7. Mr. Pawseyasked the Chancellor of the Exchequer what representations he has received advocating the abolition of car tax.
§ Mr. BrookeA number of such representations have been received.
§ Mr. PawseyIs my hon. Friend aware that only the motor industry is discriminated against by having imposed upon it a separate and additional tax? Does he agree that if it were abolished it would benefit both the consumer and the motor industry and would lead to a substantial number of additional jobs?
§ Mr. BrookeMy hon. Friend knows that the car tax was introduced in 1973 mainly to compensate for the revenue lost from cars when the purchase tax rate of 25 per cent. was replaced by the standard rate of VAT. If car tax were abolished, a significant proportion of any increased demand would probably be met by imports, which currently represent about 58 per cent. of new car sales.
§ Mr. Douglas HoggHaving regard to the number of industries which serve the British motor industry, would not the abolition of the car tax have a significant effect upon employment in the motor industry?
§ Mr. BrookeTaxation is only one of the factors that affects the demand for cars. Per capita income, manufacturers' unit production costs and pricing policies also affect demand. However, I take my hon. Friend's point.
§ Mr. ParkI appreciate the Minister's explanation of how the tax came to be introduced in the first place. Is he aware that if he were to remove this unique tax it would be more than compensated for by the increase in car sales? Austin-Rover, having been asked, is confident that it would be able to gain a full proportion of the increase in sales if the tax were abolished.
§ Mr. BrookeA useful rationalisation has taken place within the United Kingdom motor industry, but excess capacity in western Europe and elsewhere remains. Imports, therefore, remain a considerable risk. However, I am delighted to say that the optimistic climate created by the Government has led to expansion at Vauxhall, Lotus, Jaguar and Peugeot.
§ Mr. SnapeDoes the Minister accept that this tax is a unique imposition upon the British volume car manufacturer and that it is yet another example of this Government shooting British industry in the foot, to the benefit of its foreign competitors?
§ Mr. BrookeThis car tax applies to all manufacturers, whether they are foreign or British manufacturers.
§ Mr. NichollsShould not any mitigation of the car tax take second place to doing something about the fact that a constituent of mine can earn £91 a week as a nurse and then find that she has a take-home pay of only £68? Is not that the kind of thing that ought to take pride of place as regards any mitigation of tax?
§ Mr. SpeakerOrder. That is ingenious, but it is a bit wide of the question.
§ Mr. BrookeThat seems to me to be a Budget question and it would he inappropriate for me to anticipate my right hon. Friend the Chancellor of the Exchequer.