Motor industry reacts to Budget 2004

17 March 2004 #SMMT News

  • Industry welcomes freeze on VED and company car tax
  • Government urged to watch carefully LPG fuel duty increases
  • Relief at realistic timeframe for lorry road user charging
  • Uncertainty for manufacturers and investors continues with euro assessment delays

The motor industry today welcomed the freeze in many motoring taxes announced in today’s budget which will bring a period of stability to markets for low carbon and alternative fuelled vehicles.

The industry has called for impact studies looking at the effects of new CO2 based systems and urged no further changes in tax until results have been published. A freeze in Vehicle Excise Duty (VED) is therefore welcomed as is stability in the company car market, where drivers will face no increase in their personal tax liability for the 2006/2007 tax year.

While fuel duty incentives remain for vehicles powered by LPG, SMMT has urged a watching brief over the effects of reducing the tax differential by 1p per litre until 2007. Duty differentials for both bioethanol and biodiesel have also been guaranteed until 2007 and this has been welcomed by the industry.

On lorry road user charging, SMMT is relieved that implementation has now been delayed. After the chaotic experience of Germany, the government’s new timeframe of 2007/2008 will allow more time to address the practical and administrative factors that need to be overcome.

Commenting on the 2004 Budget, SMMT chief executive Christopher Macgowan said, ‘Today’s Budget extended the chancellor’s principles of economic stability to motoring taxation. We welcome incentives for zero sulphur fuel, a freeze in Vehicle Excise Duty and no change to company car tax thresholds in 2006/2007.

‘The industry will also carefully examine the announcement of broadening criteria for reductions in the climate change levy for manufacturing sites. However, SMMT remains concerned that one of the biggest factors fuelling uncertainty for both manufacturers and investors in the UK has not been addressed, with the news that assessment on Euro entry will be delayed for another year.’

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