The BVRLA has given a cautious welcome to Chancellor George Osborne’s Summer Budget, which included a further freeze on fuel duty, a new VED regime and changes to the MOT test.
“Motorists and businesses will benefit from this continued freeze, but there is now a compelling case for the government to go one-step further and provide a real stimulus to the UK economy by cutting fuel duty.”
The government’s decision to introduce new VED bands from 2017 for newly registered cars will help protect Exchequer revenues, which had been falling alongside average emissions. The Chancellor pledged that overall VED revenues would remain at current levels and that this income would be ring fenced for a new Roads Fund from 2020.
“Although we welcome the commitment to maintain current VED revenues and invest the income on roads in the future, we are concerned that the existence of two different VED bandings from 2017 could create extra complexity and cost for the fleet market,” said Keaney.
“The new 2017 bandings also represent a policy shift away from the tax being based solely on tailpipe emissions, with vehicles costing more than £40,000 facing an extra annual £310 surcharge for the first five years. Many ultra-low emission hybrid vehicles could fall into this category, which might put prospective customers off.”
Elsewhere, the BVRLA looks forward to the government’s planned consultation on pushing the first car MOT back to four years, but believes that a wider discussion on vehicle testing is needed.
“Cars are more reliable than ever, but extending the first MOT deadline could pose safety issues for cars that are doing high mileages and aren’t serviced regularly. There could be a case for developing a time and mileage-based criteria for the first MOT,” said Keaney.
“Vans are the fastest growing sector of the road transport sector and concerns over their first-MOT pass rate mean that the government did the right thing in excluding them from this proposal.”
Finally, the BVRLA welcomed the news that the Corporation Tax rate will be reduced to 19% in 2017 and 18% by 2020.
“This will help safeguard the UK’s economic growth by making the country a more attractive place to invest in, and may help offset the absence of 100% first year allowances for companies renting or leasing low-emission vehicles.”
Today the Chancellor announced a new vehicle excise duty (VED) banding system for cars registered on or after 1 April 2017. First year rates will vary according to the vehicle’s CO2 emissions. There will be a flat standard rate of £140 for all cars for subsequent years, except those emitting 0g/km of CO2, for which the standard rate will be £0. Cars, including zero-emission cars, with a list price above £40,000 will be subject to a £310-per-year supplement for the first five years in which the standard rate is paid.
Mike Hawes, SMMT Chief Executive, said, “We recognise the current VED system needs to be reformed and highlighted this in a recent report. The Chancellor’s Budget announcement on the regime came as a surprise and is of considerable concern. While we are pleased that zero-emission cars will, on the whole, remain exempt from VED, the new regime will disincentivise take up of low emission vehicles. New technologies such as plug-in hybrid, the fastest growing ultra low emission vehicle segment, will not benefit from long-term VED incentive, threatening the ability of the UK and the UK automotive sector to meet ever stricter CO2 targets.
“The introduction of a surcharge on premium cars also risks undermining growth in UK manufacturing and exports. British-built premium cars are in increasing demand at home and globally, and the industry helps to support almost 800,000 jobs in the UK. Levelling a punitive tax on these vehicles will almost certainly impact domestic demand.”
The Freight Transport Association says common sense prevailed with the Chancellor’s Budget announcement of a freeze on fuel duty, but that it will continue to campaign for cuts on behalf of its members.
James Hookham, FTA’s Deputy Chief Executive, said:
“The Chancellor has listened to the voice of industry by keeping fuel duty at current levels, which is to be welcomed. However, the Government has emphasised that its primary objective is to protect the UK economy. We believe that reducing fuel duty would make a huge contribution to this objective and we will continue to campaign with FairFuelUK for a 3 pence per litre cut in order to stimulate economic growth.”
The Association, which has 14,700 members in the logistics industry, says falling fuel prices have been a major factor in the country’s recovery. But high taxes mean transport operators haven’t benefited, with only a 13% cut in prices at the pump despite a 43% drop in world oil prices.
The Road Haulage Association welcomes the Chancellor’s decision to freeze fuel duty.
RHA Chief Executive Richard Burnett said: “The freeze on fuel duty continues the very positive policy of the last government and will give a massive boost to business confidence not only in the road haulage industry but the economy as a whole.
“We would have preferred a 3p a litre cut in duty, to boost both jobs and growth but it was essential that duty was not increased. Our hauliers already pay by far the highest diesel duty in the EU and twice as much as many of our competitors.”