Clause 1
Finance Bill
12:00 pm
Jeremy Browne (Shadow Chief Secretary To the Treasury, Treasury; Taunton, Liberal Democrat)
I do not want to incur your wrath again, Sir Nicholas, so perhaps I should not go too far down the path of smoking elasticity, but I think that the point is generally accepted. I am not aware of any party that suggests that levels of tobacco taxation should be dramatically lower, because there are health benefits from having higher taxes. What the Government propose in the Budget and what my party is proposing to a greater scale, is that the bigger a vehicle’s engine size, the higher the vehicle excise duty should be. We do not focus specifically just on cars, but also have proposals on flights. That will give consumers an incentive to buy a lower polluting model of vehicle, although some will choose not to. Interestingly, I recently talked to a person from Land Rover who said that demand seemed to be fairly strong in his sector, so it could be argued that the Government’s policies on differential vehicle excise duty are not sufficiently great to have the desired effect on people who choose to purchase higher emission models.
Some people on low incomes and many households in this country do not have a car at all. In debates such as this, the assumption is that everyone has a car, but many people in this country do not, and they tend either to live in large cities with good public transport or to be in very low-income households. On average, they are quite a lot poorer than the population as a whole. On the argument made by the hon. Member for Runnymede and Weybridge, under these proposals someone paying higher-rate tax could choose not to have a car if they lived, for example, in central London. Indeed, under the Government’s proposals, they would reduce their tax liability as a consequence.