XN000022-1995-02-15 — Page 31

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Annual Licence Fees and First Registration Taxes

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Tax increases are never popular, and they may be considered a particularly, foolhardy proposal in an election year! I am grateful and thankful that at least the Honourable Jimmy Mcgregor has noted this point. And certainly I am not surprised at all that all the political parties have strong reservations and have objected to these proposals. But increases in ALF and FRT are necessary, not to boost the Government coffers as some have said, but simply to slow down the growth rate in private car numbers that is leading us relentlessly and inevitably towards traffic gridlock. Let me make one thing clear. The Government is not mounting an attack on the private motorist. We are not attempting to drive cars off the road. Our aim is to contain the rate of growth in the private car fleet at about 2 or 3% a year, a level that our ever expanding road system can accommodate. The extra funds arising from the increase in the First Registration Tax will be used to finance further improvements in the public transport system. The Government is as I have said prepared to set up a special fund for this purpose. I hope that this reassures those members who still remain concern that FRT increases but seek to raise revenue.

The Motor Traders' Association, as is to be expected, have come out very strongly against increases in taxes. This is not surprising. After all, their main interest is in selling cars. Although we may have to agree to disagree on solutions, I nonetheless welcome their campaign since they have highlighted the congestion problem.

The Administration remains fully convinced that fiscal measures would have an immediate impact. As for increases in the First Registration Tax there has been some criticism that the proposed increases for smaller cars is more than that for luxury cars. In percentage terms 'yes' but not so in dollar terms since the rise in new car prices would be about $25,000 at the lower end of the market and about $55,000 at the upper end. But I am prepared to balance this by maintaining the existing differential in the sliding scale, if that is deemed to be more acceptable, by proposing to raise the tax from 60% to 90% for luxury cars. Annual Licence Fees have not been increased for 4 years and all we are attempting to do is to update these fees to 1995 prices. As for increases in the First Registration Tax, our firm intention remains that extra revenue would be channelled into a special transport fund. And of course the concept of such a fund has been generally welcomed.

As regards motorcycles I shall carefully consider whether the tax on them need be increased so substantially, if at all.

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