It’s Budget day tomorrow and as the Chancellor holds up the famous red briefcase, the motor industry will be on tenter hooks.
The Budget is expected to stick much to what was announced in the Pre-Budget Report back in November-with a wide range of tax increases expected to hit both individual motorists as well as businesses dependant on road transport. However there will be those who will hope that Alistair Darling speech tomorrow may ease the pressure building on the motor industry and car buyers.
Just as the scrappage scheme ends this month, new showroom taxes are to be introduced in April, which set a higher rate of first year road tax for the most polluting of new cars. In some cases, the showroom rate will be double the regular rate of VED. The road tax rates for cars already registered is planned to change, reducing by as much as £30 for the cleanest cars and increasing by as much as £30 for the thirstiest cars. These changes are likely to be given the final nod of approval as part of tomorrow’s Budget.
Company car tax and capital allowances will also change but most motorists will be most interested to see if a planned fuel duty increase goes ahead despite rising fuel costs. Currently the average cost per litre of petrol stands at 117 pence-close to the all-time high experienced back in summer 2008. An April increase in fuel duty could add an additional 2p or 3p to the price of a litre- a premise which has angered some motoring groups.
Says Road Haulage Association (RHA) director of policy Jack Semple: “The Chancellor will be known for an astonishing ratcheting up of duty levels in the depths of recession – and our duty level was already by far the highest in the EU.”
As the market for new cars is projected to contract through the second half of 2010 thanks to the removal of the scrappage scheme and implementation of higher taxes, the onus for Mr Darling will be to balance raising tax revenues without suffocating the delicate recovery of a still fragile economy.
There will of course be some winners, as taxes rise, the incentive to ‘go green’ becomes ever stronger. Sales of small, fuel efficient ‘green cars’ may be one area of the market that should remain more resilient to these more austere times. However more will be revealed tomorrow when Alistair Darling delivers his Budget speech.
Stayed tuned to TheGreenCarWebsite.co.uk tomorrow as we deliver our verdict on the new Budget.
