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Motoring organisations call for car tax rethink

New car tax rates 'should be scrapped'

Car tax rates are under scrutiny

Car tax rates are under scrutiny

Plans for higher car tax rates should be scrapped to protect the UK’s ailing automotive sector, industry bodies said on Wednesday.

In a joint letter to the Chancellor and Business Secretary Lord Mandelson, the Society of Motor Manufacturers and Traders (SMMT) and the Retail Motor Industry Federation (RMIF) said doing away with the new car tax rates was just one of a range of measures needed to stimulate the UK car market.

Global demand for cars is falling and many believe drivers in the UK are being discouraged from buying new cars because of plans to increase car tax.

New car tax rates

An overhaul of the vehicle excise duty (VED) system, which is due to take effect in April 2009, would see some new-car buyers paying a higher ‘first-year rate’.

Other motorists would be charged retrospectively, based on the CO2 output of a car they chose months or years before the changes were announced.

The SMMT and RMIF also want car manufacturers’ finance companies to be given access to the cash that has helped some banks through the downturn. They claim ‘special liquidity arrangements’ would allow carmakers to give better support to their customers and franchise networks.

‘Unprecedented conditions’

SMMT chief executive Paul Everitt said: ‘The motor industry faces a set of unprecedented market conditions. Urgent action is required to boost demand for new vehicles and ease pressure on UK automotive suppliers.’

Paul Williams, chairman of the RMIF, said: ‘It is vital that the motor industry presents a united front at this time. We urge the Chancellor to undertake these measures, and to discuss further action with us if necessary.’

Monday’s pre-Budget report is expected to clarify the government’s stance on car tax rates. The Which? Car guide to the new car tax rates shows you how you will be affected if the changes go ahead, and this guide to beating car tax rises tells you how you can avoid higher charges.


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