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Budget warning to Chancellor

THE motor industry is sounding a word of caution to Chancellor of the Exchequer Gordon Brown ahead of his pre-Budget statement.

Amid growing reports of the rising costs of motoring and the importance of reduced CO2 emissions, the Society of Motor Manufacturers and Traders (SMMT) said it had urged the Chancellor not to de-stabilise the trend towards cleaner cars by over-taxing the motorist.

'The motor industry is committed to reducing CO2 emissions in line with environmental objectives and has made tremendous progress in the development and introduction of new technologies,' said SMMT chief executive Christopher Macgowan.

'To be successful in the long term, the Government must deliver clear incentives to motorists in order to increase the take-up of cleaner fuels and 'greener' technologies.' He added: 'There is a danger of undermining the progress made in reducing car emissions by attempting to increase revenue. The Government should allow the new tax systems to be properly evaluated before further changes are made.'

The SMMT, which represents more than 600 companies in the automotive sector, identified a number of issues for consideration by the Chancellor in his pre-Budget report.

On company car tax, the SMMT said in its submission: 'The CO2-based company car tax system has been subject to continuous reductions in its banding and minimum level, down to 140g/km CO2 by 2005/6. This shift has had a significant impact on the motorist's choice of business cars, with a surge in diesel engines and superminis.

'Further reductions could undermine these gains by forcing more drivers to opt out of company schemes and choose older, less efficient vehicles instead. The Government should refrain from further changes until the Inland Revenue has completed a full evaluation.'

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