Motor Vehicle Duties

Part of Financial Statement – in the House of Commons on 25th April 1944.

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I informed the House early this year that I was reviewing the taxation of motor vehicles and the fuel that they consume. At the present time, when it is almost impossible for me to sacrifice revenue, the first question that presents itself is whether there would be any advantage in altering the distribution of the total taxation from these sources as between the licence on the vehicle and the tax on the fuel. I have come to the conclusion that the balance of argument against this course is formidable. Whether, this being so, there should be any change in the way in which the vehicle tax is levied presents itself as the second question. It is, of course, clearly desirable that our manufacturers should not be hampered by the form of our taxation from adapting the design of their cars and engines to the circumstances likely to exist after the war. I find, however, that while everybody agrees that a reduction of taxation would be a good thing—and it is easy for anyone, except, perhaps, a Chancellor of the Exchequer, to agree to this—there is no such unanimity on the effect of motor taxation on design. I have in mind particularly the horse-power tax on private cars. That tax may have helped, along with many other factors which govern the conditions of motoring in this country, to lead to the development of a rather special type of engine for the home market. But it has also been a valuable form of protection against imported cars. I have an open mind on this subject myself, and if it is the considered view of the motor manufacturers that a change from the present horse-power tax to some other basis, yielding about the same amount of revenue, is desirable, that a change would be an advantage—for instance, a change to cubic capacity and possibly a change of taxation with a different graduation or with wider steps than under the present system—I would be ready to listen sympathetically to representations.