Motor industry response to pre-budget statement

02 December 2004 #SMMT News

  • Company car tax surcharge waiver on diesel slashed from 1 January 2006

  • Still no timeframe for the introduction of zero sulphur fuel

  • Review of employer training scheme for ‘intermediate skills’ is a positive step

SMMT was today shocked by the news that company car drivers will pay more tax if they buy a new diesel car on 1 January 2006. From then, the three per cent diesel surcharge waiver, applied to the cleanest Euro IV diesel vehicles, will no longer be included in company car tax rules. This could create a surge in diesel registrations towards the end of 2005.

Commenting on the news, SMMT chief executive Christopher Macgowan said, ‘It simply doesn’t make sense to remove this waiver in one fell swoop. We had asked government to advise us well in advance of any phase out – and to do it gradually. That way both government and industry could have avoided market distortions.’

The industry has also expressed concern that the Chancellor failed to announce any timeframe for the introduction of zero-sulphur fuels. If government is truly committed to an incentive for this fuel then the industry needs guidance and time to plan for its introduction. This will allow cleaner technologies, including direct injection petrol engines, to be brought to market more quickly.

On the Chancellor’s comments on skills and training, SMMT welcomed support for nationwide employer training schemes aimed at improving Level 2 skills. A shortage in Level 3 skills has been identified as a particular issue for the motor sector, so SMMT is pleased to learn that similar schemes for intermediate and higher level skills will be subject to review.

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