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New Clause—(Expenditure Of Tax Allowances For Repairs On Motor Vehicles)

Volume 416: debated on Thursday 29 November 1945

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Where for the purposes of excess profits tax or income tax allowance has been made for repairs to motor vehicles and by the reason of the emergency created by the war such repairs have not been executed the said allowance or part thereof may be applied to meet expenditure on new vehicles to replace the old vehicles in respect of which the allowance was made. [ Sir W. Wakefield.]

Brought up, and read the First time.

9.30 p.m.

I beg to move, "That the Clause be read a Second time."

The purpose of this Clause is to encourage the purchase of new vehicles rather than the repair of old ones, by allowing the money which has been admitted for deferred repairs to be utilised for the purchase of new vehicles. Very briefly, the reasons are as follow: It is of the utmost importance for the trade of the country as a whole for the road haulage industry to be efficient and run economically. This can best be done with new vehicles rather than by repairing old vehicles. Furthermore, in view of the shortage of labour, if people are used in factories to manufacture new vehicles rather than to repair old ones, this will be of advantage to the export trade. From the road safety point of view also, it is better to have new vehicles on the road rather than old, obsolete and worn-out vehicles. These are the reasons why the Government are asked to give sympathetic consideration to this Clause. During the war the remuneration of the road haulage industry has been limited by arrangements with the Ministry of War Transport, both for con- trolled undertakings and for hired vehicle operators, It has not been possible for them to put aside as much as would normally have been put aside for the purchase of new vehicles. The depreciation or wear and tear allowances provide money for replacements at the original prices, but— and this is the point for which Government sympathy is asked—new vehicles will be some 6o per cent. or more in price than the old ones, and for small operators, who compose the great bulk of the road haulage industry, this will be a severe handicap. If money which has been set aside for deferred repairs could be permitted to go towards the increased cost of the purchase of new vehicles, it would be extremely helpful to this industry. We ask for this as a special case, due to the circumstances arising out of the war, and not as a permanent feature. I hope that with that statement, which is brief in order not to detain the Committee, we may have the sympathetic consideration of the Chancellor of the Exchequer towards the proposal contained in this Clause.

As the Committee will remember, this matter was dealt with in the Second Reading Debate. The short answer to the hon. Member is that the point he makes is actually covered under the legislation now in being. It is quite obvious that if repairs do not take place there could not, either under E.P.T. or Income Tax, be an allowance given for something which never happens. That being so, it is impossible for us to accept this Clause, even if it were necessary, which, actually, it is not, because the trader who replaces his vehicle after the war without repairing it will not be penalised in any way. He will get his full allowance in respect of the replaced vehicle and a special allowance for the new one. He will have had his wear and tear and obsolescence allowances in respect of the old one under Income Tax and E.P.T. If the hon. Member would agree to see me at some time I think I could make it perfectly clear to him that the point he raises is actually covered, and that the traders he has in mind will not be penalised in any way under the present Finance Bill. That being so, I hope that he will agree to withdraw his Clause.

In View of the statement made by the Financial Secretary, I beg to ask leave to withdraw the Clause.

Motion and Clause, by leave, withdrawn.