§ Mr. Malcolm BruceTo ask the Secretary of State for Transport if he will estimate the(a) first year and (b) full-year costs of reducing vehicle excise duty to £10 per annum for vehicles of engine size of 1500 cc and below. [12750]
§ Mr. BowisThe most recent data for 1995, from vehicle licensing statistics, show around 9.29 million vehicles with an engine size of 1500 cc or below in the private and light goods vehicle tax class. Reducing the vehicle excise duty for these vehicles from £145 to £10 implies a revenue loss of around £1.25 billion. The losses in future years would depend upon the growth in the vehicle stock and the behavioural response to the change in the structure of vehicle excise duty. There would also be significant administrative and enforcement costs associated with implementing such a change in the tax system.