Orders of the Day — Hydrocarbon Oil Duties (Temporary Increase) Bill

Part of the debate – in the House of Commons at 12:00 am on 10th December 1956.

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Photo of Mr Frank McLeavy Mr Frank McLeavy , Bradford East 12:00 am, 10th December 1956

What the hon. Gentleman the Member for Cheadle (Mr. Shepherd) has just said will, I think, meet with general agreement throughout the House. I regard the decisions of the Chancellor to introduce this additional tax upon petrol and fuel oil as a profound mistake.

This is not an occasion when the Chancellor finds himself in a budgetary difficulty. The Chancellor is determined to maintain the estimated tax yield of £340 million from this particular section of tax revenue. If we take his figures, he estimates that without the 1s. increase he will lose, for the remaining months of the present financial year, some £30 million. Quite frankly, I consider that it would be far better for the Chancellor to lose the £30 million in estimated taxation for the next four months than cause difficulty to industry by imposing this additional temporary tax.

If the Chancellor insists upon keeping the balance of his Budget and recouping the £30 million, then, in fairness to the users of petrol and oil, he ought to have considered whether the scope of the tax might be broadened. As the Financial Secretary to the Treasury knows, it is only the road transport industry which, by and large, pays any tax at all upon oil or petrol. Certainly, there is a very large section of industry which pays no tax upon the oil it uses. If the Chancellor felt, in the last resort, that he had to recoup this £30 million, it would have been far more reasonable, in my view, if he had said that he would spread it over the larger group comprising all those consuming the product. I am sure that had he decided to extend the taxation, even in a limited degree, to those industries which already enjoy exemption, he would have been doing something far more profitable than the proposals which are now before us.

It seems to me that the Chancellor is not concerned about the equity of this tax. All that he is concerned with is raising the necessary £30 million during the next four months. The hon. Member for Cheadle referred to this and seemed to imply that the Suez problem was the cause of our economic difficulties. What we have to do is to get our facts clear upon the whole economic position. The economic crisis was on our doorstep before the problem of Suez arose. The grave problem now confronting the nation, therefore, stems not from Suez, but from our whole economic position.

I want to deal specifically with the two sections of the transport industry which are affected by the proposed increase in tax. In the road haulage section, we find that the Transport Commission is to increase its charges by 7½ per cent. and the private sector proposes an increase of 10 per cent. I am quite sure that these two increases in the costs of road haulage will represent an increase in the cost of transportation of goods which will be detrimental to our ability to maintain the existing price levels of our commodities in the export and home markets. When we bear in mind the effects of these 7½ and 10 per cent. increases in the cost in transport and consider that all kind of amounts will be added in consequence throughout industry, it is clear that the cost of our commodities in the export and home markets will be materially increased.

In the passenger section, the outlook is even more serious. Most of the municipal undertakings are already carrying a heavy debt and finding it extremely difficult to balance their budgets. They are being authorised to increase their fares to recoup the additional taxation. This will be an extra tax upon the travelling public, who in turn will expect an increase in wages to meet the additional cost. No one denies that the increase in bus fares will reflect itself in the living standards of our people, who will be demanding wage increases as a consequence.

It is unreasonable for the Chancellor to introduce this increased taxation at a time when it is essential to try to keep the cost of living stable. In spite of the provisions that the Chancellor is including in the Bill, the effect upon the bus companies and the municipal undertakings may well mean that the continuation of many of the services of an unprofitable nature, in country areas and the like, will have to be seriously reconsidered.

Passenger transport undertakings cannot afford to bear the heavy burden of taxation which is placed upon them by Chancellors of the Exchequer of successive Governments. A double-deck omnibus, for example, has to bear tax amounting to about £85 a year, according to its seating capacity, which, together with the tax of 3s. 6d. a gallon on fuel oil, represents a terrific factor in mileage costs. The fuel oil tax at 2s. 6d. a gallon has been estimated to cost the bus undertakings an average of about 3d. per mile. It is clear, therefore, that in view of the various items of expenditure confronting the transport industry, this tax will cause considerable difficulty.

I appeal to the Financial Secretary to put before the Chancellor the suggestion that, first, he should consider whether, if the tax has to be applied, the £30 million should not be spread over the wider range of consumers of petrol and fuel oil; and, secondly, he should consider limiting the period of operation of the extra tax, so that Parliament can have an opportunity to consider whether its continuation is justified. This is an unfortunate decision by the Chancellor and I hope that he will reconsider it and decide to withdraw the Bill.