Fleet News

BVRLA Budget Guest Opinion: Brown 'milks the motorist'

GORDON Brown sent out a number of mixed messages for the business car driver in his Budget yesterday, says John Lewis, director general of the British Vehicle Rental and Leasing Association. But the overall effect was to hit, yet again, the soft target of the motorist with a series of tax rises concealed behind the ploy of green credentials.

'We already have the highest rates of fuel duty in Europe and we pay around £46 billion in motoring taxes already,” inveighed John Lewis, the BVRLA’s Director general. “Now, Gordon Brown wants to hit the motorist, especially the business driver as well as his company, with yet more tax. But what I find even more distasteful than this attack on the motorist, is the inconsistency that is being applied by this government in its approach to motoring taxes. Let me explain.

'Drivers on being taxed for benefit in kind on their company cars, suffer a three percentage point penalty if the car is a diesel. This is allegedly to compensate for higher pollution levels of NOx and particulates. And yet, the government has today, said that because emissions of NOx for both petrol and diesel are heading towards zero, it will align Vehicle Excise Duty (VED) rates for both types of car. Hitherto, diesels in each of the main VED bands were £10 pa higher than their petrol equivalents. Now, unsurprisingly, petrol has been raised to the same level as diesel and both have in addition, increased by £5 pa. And that as a result of pollutants reducing!

'And then, more worryingly, the Chancellor has also said that he is also considering treating diesel differently again under new Corporation Tax rules that he will introduce in the future. It all adds up to a government that doesn’t seem to know in which direction it is heading or one that knows what it is doing.

'On one topic in particular we are extremely critical of the government. Corporation Tax allowances for business cars may not rank high on everyone’s agenda but they are fundamental to the fleet industry. We have been campaigning for some considerable time for reform to this area and have been consulted on numerous occasions by government. While the papers published with today’s Budget give few details apart from the fact of yet another consultation exercise – the third in two years – it would appear that allowances are going to be lagged still further than they are at the moment.

'This will inevitably put up costs to industry whether vehicles are purchased or leased. It seems that most of the information we have provided has been completely ignored.

'Where we are, shall I say, particularly disappointed, is in hthe retention of a form of rental disallowance. Currently applying to vehicles that cost more than £12,000 it could in future apply to cars emitting more than 165 g/km. This iniquitous tax is suffered only by contract hire and not by any form of purchase and is thus inequitable, unfair and distorts the market.

'Companies should make their acquisition decisions based purely on their commercial needs rather than on any tax based criteria. And as I mentioned earlier, there may still be a different criteria for diesel engined cars and also for cars used on daily rental and the government’s own Motability scheme. In all it adds up to a dog’s dinner where the only certain outcome is market confusion and disarray.

'There may appear to be better news in other areas. In trucks for instance. Here the Chancellor has said there may be incentives for operators to take Euro V vehicles early. I hope he’s right but in view of the market uncertainty and confusion that still surrounds the EGR/SCR debacle for Euro IV then I can hardly see this as being a solution. The market must have time to settle down and assimilate current technology before moving on to the next.

'There are additional rises in VED other than those mentioned above. For example the creation of a new top band. Frankly, this is a nonsense. The idea that anyone will be put off using a car because they have to pay just over £1 a day in VED for a car that is likely to cost several tens of thousands of pounds is just ludicrous. People who buy such cars can afford a pound a day. All it will do is raise yet more money for the Treasury at a time when the Chancellor is desperate for every penny.

'If the government is genuine in its desire to take action to protect the environment, which I am sure it thinks it is, then it should hypothecate the tax increases it’s planning to take. In other words ring fence the money and use it for developing new technologies to reduce emissions and protect the environment. I issue this challenge to the Chancellor – You’re taxing us more heavily than ever. Put our money where your mouth is.'

Leave a comment for your chance to win £20 of John Lewis vouchers.

Every issue of Fleet News the editor picks his favourite comment from the past two weeks – get involved for your chance to appear in print and win!

Login to comment


No comments have been made yet.

Compare costs of your company cars

Looking to acquire new vehicles? Check how much they'll cost to run with our Car Running Cost calculator.

What is your BIK car tax liability?

The Fleet News car tax calculator lets you work out tax costs for both employer and employee