In a speech to the Trade Association Forum annual conference, SMMT chief executive Christopher Macgowan has highlighted the dangers of any measures in next week’s budget that might harm the UK motor industry’s ability to compete on the national and international stage.


Increased business taxes and the strength of sterling continue to hinder manufacturers in this country, despite a strong economic base. Macgowan said that any greater costs levied on the industry would put further pressure on those operating in the UK and make this country a less attractive investment proposition for companies based abroad.


He said: “Government needs to send a clear signal to global investors to bring them to the UK. In part this means actively promoting the interests of the UK automotive sector abroad, but importantly it also means ensuring that the underlying business environment walks the talk.”


The industry will be looking for a steady hand on 17 March when the chancellor considers the many vehicle and fuel taxes.


The SMMT chief said that any further changes to the CO2 emissions-based company car tax system must not take place until the Inland Revenue has completed its evaluation report and discussed its implications with the industry. There is a concern that any further tightening of the thresholds would result in more drivers opting out of company schemes and choosing older, less efficient vehicles.


The introduction of a CO2-based VED (annual vehicle tax) system in 2001 sent a clear message to car buyers about the importance of carbon dioxide emissions. However, the system has been subject to revisions in each subsequent year and further amendments should be avoided to prevent confusion.


The UK motor industry supports the continued use of incentives to drive the take-up of cars and commercial vehicles powered by alternative fuels. Any increase in road fuel gas tax must therefore be phased in gradually to avoid undermining the market. This is particularly important following the recent announcement that PowerShift grants (effectively a subsidy for the purchase of alternative fuel vehicles, including hybrids) will be cut by 30% for 2004.


Benefit in kind taxation for employer provided vans is straightforward, transparent and broadly appropriate and it is important that this is not changed, the SMMT chief said. Particular classes of commercial vehicle or body type should not be presented as more of a benefit than others. Their benefit should be determined by access and use, rather than on the vehicle’s specification.


As part of its working brief with the Low Carbon Vehicle Partnership (LowCVP) representatives of the motor industry will continue to stress that the significant changes made to vehicle taxes need to be carefully evaluated before further changes are made, Macgowan said.