”Drive carefully, Chancellor”, warns motor industry ahead of Budget

25 March 2003 #SMMT News

  • No increase in business taxes
  • No increase on mainstream fuel duties
  • A full review of changes to company car tax and its effects
  • A duty reduction on petrol used for research and development testing

The motor industry today urged the Chancellor, Rt Hon Gordon Brown MP, not to undermine the stability and competitiveness of the UK automotive industry by increasing taxes in the forthcoming budget.

In a report to the Treasury, SMMT expressed concern that the economic stability and positive tax regime benefiting the UK over recent years has been steadily eroded. Any further tax increases and uncertainty over current incentives would weaken domestic demand and threaten UK competitiveness within the global economy.

Commenting on the submission, SMMT chief executive Christopher Macgowan said, ‘2002 was a record-breaking year for new car registrations making Britain the second largest market in Europe. However, global competition is fierce and government must act to promote domestic demand and enhance the UK’s competitiveness. The Chancellor’s commitment to positive tax regimes and economic stability over recent years must be maintained in order to keep Britain’s position as a leading global player in the industry’.

Fuel Duty

The motor industry supports government intentions to introduce duty incentives for fuels with zero sulphur content. However, the UK should commit to a stable regime for ‘cleaner’ fuel incentives in the long term to allow manufacturers to plan the introduction of new technologies. The Chancellor should not offset this with increases to mainstream fuel duties.

Company Car Tax

The industry supports the Inland Revenue’s research programme into the impact of recent changes to company car taxation. However, a full review of all changes should now be completed before any further decisions are made. The industry is concerned that any tightening of the CO2 banding rates beyond 2004/5 would harm business and fleet registrations, thereby weakening domestic demand.

Research and Development (R&D)

Government has recognised the importance of R&D to long term business success but more incentives are needed to encourage large global companies to work in the UK. The current duty reduction on diesel fuels should be extended to petrol used for research, development and testing thereby improving the competitiveness of UK facilities.


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