Now that the £700m truth about Alistair Darling’s ‘showroom’ tax has emerged, it’s well worth reflecting that this is merely the re-introduction of a tax abolished in 1992 by the Tory government egged-on, ironically, by Labour MPs worried about jobs in the motor industry. How times have changed.
Between 1968 and 1992 the price of every new car sold was bumped up by the much-detested ‘Special Car Tax’, introduced by a Labour government that had lost control of Britain’s finances. Sound familiar?
SCT added 10 per cent to the price of every new car sold. In its last year it brought in £750m a year, £628m in tax and £122m in VAT. It was abolished after a long campaign by the car industry, which estimated SCT depressed cars sales by up to 70,000 cars a year – and the market certainly boomed in the years after it was ended.
Re-introducing an old tax glossed-up with the veneer of green respectability is probably something we can expect to see more of in the future. What an amazing, and clearly unrelated, coincidence that the amount raised in 1992 by Special Car Tax is exactly the same as that to be raised by the new showroom tax in 2010 and after.
Ironically one of the most vocal abolitionists back in 1992 was Andrew Smith, then and now the Labour MP for Oxford East, whose constituency includes the Cowley plant. Back then it was part of Rover Group and now it houses BMW’s highly successful Mini factory. Yet now, despite the substantial risks this new charge plays to the remaining parts of Britain’s indigenous motor industry, we haven’t heard a peep from Mr. Smith or the other MPs with car factories in their constituencies.
Read Autocar's budget 2008 analysis here