Orders of the Day — Car Tax (Abolition) Bill

Part of the debate – in the House of Commons at 8:35 pm on 25th November 1992.

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Photo of Mr Anthony Nelson Mr Anthony Nelson , Chichester 8:35 pm, 25th November 1992

With the leave of the House, I shall reply to the debate. Hon. Members have welcomed the proposal. There was a warm welcome from the Conservative Benches and a miserly one from Opposition Members. I regret that, because this proposal is a considerable element of the autumn statement and it has been widely welcomed by industry generally and by representative bodies of the motor industry.

I will try to answer as briefly and as directly as possible a number of the points that have been raised. The hon. Member for Oxford, East (Mr. Smith) has an important car interest in his constituency, He accused the Government of a semi-detached stance on Europe. If the Government's stance is semi-detached, the Opposition's stance is positively schizophrenic. The hard-fought agreement on Maastricht was the agreement that my right hon. Friend the Prime Minister sought and wanted and we obtained a majority in the House for it. In the recent debate, the Opposition went back on their commitment for the basest of political, opportunist reasons.

The hon. Member for Oxford, East said that the proposal provided no extra fiscal stimulus. As I said in my opening remarks, the proposal was intended as a transfer towards a tax on use rather than on purchase. The tax yield forgone in the remainder of this financial year is £100 million and that is not being recouped by additional motoring taxes.

The hon. Member for Oxford, East expressed surprise at the novelty of my right hon. Friend the Chancellor of the Exchequer announcing that he would seek to recoup the revenue in motoring taxes next year. I believe that my right hon. Friend was being responsible. He would not want to give the impression in the current circumstances that fiscal policy can be relaxed unduly. The substantial package of measures that he announced in the autumn statement, including the abolition of car tax, has a cost tag attached to it next year and beyond that will have to be met.

The hon. Member for Oxford, East and the right hon. Member for Berwick-upon-Tweed (Mr. Beith) wanted to know the cost if the cost of abolition were added to petrol. The answer is 2·2p on leaded petrol and 1·8p on unleaded and diesel.