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Clause 16—(Road Vehicles And Road Vehicle Chassis (Purchase Tax))

Volume 477: debated on Tuesday 4 July 1950

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I beg to move: in page 15, line 24, to leave out "may be determined by the Commissioners," and to insert:

"the Commissioners, having regard to the meaning of body 'and `chassis' in subsection t5) of section two of the Transport Act, 1947, may determine."
The purpose of this Amendment is to define precisely those parts of a chassis-less vehicle or integral vehicle which are to be taxed. As the Bill now stands, it is left to the Commissioners to determine what it is in the chassisless vehicle that is to be taxed. The exact wording of the Bill is:
"The expression 'road vehicles chassis' shall include so much of a chassisless road vehicle as may be determined by the Commissioners to be in effect chassis, and references to a vehicle's chassis shall be construed accordingly."
During our discussion on the Committee stage, attention was drawn to the unsatisfactory nature of this Clause. Members drew attention to the fact that the House was not carrying out its responsibility by not precisely defining what ought to be taxed. Hon. Members stated that it was wrong it should be left to an outside body—the Commissioners—to determine that part of a chassisless vehicle which ought to be taxed.

The unsatisfactory nature of this Clause and the lack of adequate definition was admitted, I think, on all sides of the House. Indeed, the Solicitor-Generaland I think it would be for the convenience of the House if I quoted his words precisely—when referring during the Debate to a chassisless or integral vehicle, said:
"When there is a strength in a body it includes the chassis as part of it."
He went on to say:
"A composite structure of that sort constitutes a strengthened body, which incorporates a chassis, but the chassis cannot really be separated from the body because it is part of one and the same structure. Thus we are imposing a tax which notionally subdivides the vehicle, and we have to ask ourselves what portion of this composite structure is to be regarded as a chassis. If that is not done it is not known what is to be charged. What is to be charged is the wholesale value of the chassis, and that is the object of this paragraph."
The difficulty was pointed out by many Members that there was no clear definition, and it was quite wrong that the Clause in its present form should be passed by the House. I go on to quote a few further words of the Solicitor-General:
"I accept that this is extremely complicated drafting, and I wish it were possible in some form or another to draft it in more simple language. I can assure hon. Members that I have said to the draftsmen very much the same as hon. Members have said to us this afternoon."—[OFFICIAL REPORT, 20th June, 1950; Vol. 476, c. 1110-11.]
That is a very clear statement by the Solicitor-General of the difficulty in which he himself, and, indeed, the whole Committee found itself in discussing this Clause.

7.15 p.m.

It so happens that there is a very clear definition available of the chassisless vehicle or, as the trade calls it, the integral vehicle, to be found in the Transport Act, 1947. In that Act there is a definition stated for the purpose of the manufacturer, and in defining "chassis" two definitions are given; one for a chassis which is normally understood to be the framework on which a body can be built, and the other relating to the chassisless or integral vehicle. This is what the second definition says in Part 1. Section 2 (5):
"In relation to a vehicle in which the framework to which the major components are attached forms an integral whole with the body-structure, the complement of major components required in order to complete that body-structure, when new, as a road vehicle."
It goes on to define what a "major component" is:
"'Major component' means the complete power unit, complete transmission system, complete suspension system, complete steering gear, complete braking system or complete axle of a vehicle."
There we have a very exact and precise definition. I suggest to the House that that definition ought to be inserted in the Bill in that form. If that is done, there will be no vagueness, no obscurity, no need for Commissioners to be called upon to define what part of a chassisless vehicle should or should not be taxed. In the Bill will clearly be stated those parts which are to be subject to tax. I suggest that definition provides the simplified form of words which the Solicitor-General complained were not available in the Committee stage.

There may be some objection that if this definition were used there would be certain parts taxed in an ordinary chassis which would not be taxed by this definition in a chassisless vehicle, and, in consequence, there may be some objection that taxation is influencing design, or that perhaps between the two types of vehicles, the chassis vehicle and the chassisless vehicle, there may be difference of taxes. That is bound to be the case even when we have the Commissioners trying to decide this matter. I suggest that should such an objection be put forward there is a clear answer, and that is, whether, for a chassisless vehicle or whether for a vehicle with an ordinary chassis, the same component parts are used for taxation purposes. We will then have these major component parts clearly defined for taxable purposes.

I suggest that if this Amendment is accepted, we shall be doing a useful and tidy bit of legislation, and carrying out the kind of thing which this House ought to do on the Report stage, following the discussions which have taken place in Committee. I hope that the Solicitor-General will see his way clear to accept the Amendment.

I beg to second the Amendment.

There is in the Bill no definition of the term "chassis." In the subsection to which this Amendment relates the decision is simply left to the Commissioners. It is true that subsection (4), which follows it, refers to the Fourth Schedule, but there is nothing to connect this subsection with subsection (4). The Fourth Schedule contains a definition of what are additions to a chassis, but no definition of a chassis itself. There is, in a recent Statute, a definition of the term "chassis," and it would be more satisfactory if that definition were imported into this Bill by a definite reference.

The difficulty about the proposal of the hon. Member for St. Marylebone (Sir W. Wakefield) is that if the definition in Section 2 of the Transport Act of 1947 is incorporated in the Bill, it results, in the case of a chassis-less vehicle, in the chassis being the component part whereas in the case of an ordinary vehicle the chassis is the component part plus the frame. The definition gives a different meaning to the word "chassis" according to whether we are talking about an integral vehicle or an ordinary type of vehicle. The result of that would be that one would be giving a very distinct tax advantage to the chassisless method of construction. When chassisless vehicles were built there would, in effect, only be Purchase Tax on the component parts. In the case of the ordinary type of body, where the chassis is not an integral part of the body, not only would the component parts be taxed but also the frame.

That would be quite unfair as between one manufacturer and another. It would mean that a tax consideration would have a determining influence on the nature of the vehicles that were produced, and that would have a distinctly bad result. That is not only the opinion of the Government but also. I am in a position to tell the House, that of the motor trade itself. The motor trade has been consulted on this kind of point and it suggested that it should be left to the determination of the Customs and Excise to say how much of the chassisless vehicle was to be treated as a chassis for the purpose of assessing the tax.

Why cannot the same components, which are scheduled for taxing in the case of the chassisless vehicle, be scheduled for taxing in the case of the ordinary chassis vehicle? That would overcome the objection, and there would be precisely the same components in the chassisless vehicle for taxing as there would be in the ordinary chassis vehicle.

The effect of incorporating the Amendment in the Bill would be to include the frame of the vehicle in one place and not in another, and that is what the motor trade thought would be undesirable. It would be most unfair between one manufacturer and another and would have a deleterious effect on the trade. It is for that reason that the motor trade itself, which is a very good judge of this kind of thing, would prefer, in the case of these integral vehicles, for it to be left to the Customs and Excise to determine what part should constitute the chassis. I suggest to the House that the Clause is better as it stands. It falls in with the wishes of the motor trade, and it does not involve the difficulty which the adoption of the definition undoubtedly would create. For those reasons I hope the House will agree that at any rate this is not the desirable way to simplify this Clause, and that the Clause should remain as it stands.

The House will appreciate the argument which the right hon. and learned Gentleman the Solicitor-General put fairly and properly in front of us, namely, that there would be a distinct advantage in favour of the chassisless vehicle if the Amendment as it stands were accepted. As I understand it, the Commissioners are allowed to charge an arbitrary sum to the tax which is imposed upon the component parts in order to allow for the frame which is not there.

That is the effect of what the right hon. and learned Gentleman has said, and the motor trade, quite properly, has said they would rather have the whole of their design. The right hon. and learned Gentleman shook his head. Does he wish to say anything?

It is not quite accurate to say that the tax in the case of the chassisless vehicle is composed on component parts, but on the component parts and, as it were, on the chassis which is itself part of the body.

That is precisely what I was saying. The difficulty arises for this reason: it is quite easy to tax the component parts of a chassisless vehicle, but to play fair between the chassisless vehicle and the one with a chassis an arbitrary sum has to be added, which represents the frame which is not there. The motor trade—and I am not blaming them; probably they are right—in order not to have their design altered by this rather extraordinary method of taxation, would prefer that the tax itself should be imposed so that it does not give a special advantage to one side or the other.

There is another alternative, which is to tax the same components and parts in both the chassisless vehicle and the one which has a chassis. It gets over all these difficulties of leaving it to the Commissioners to imagine what a frame would have been if it were there, which it is not. I feel that that is a method which the right hon. and learned Gentleman and his associates in the Treasury must have considered very carefully, and I think we ought to be told why that method was rejected.

With the permission of the House I should like to answer the point which the hon. Gentleman has just put. Since he raised it I have not had an opportunity of consulting the experts, but, obviously, a different tax would be imposed if it were imposed on the component parts and not on the frame. Further, it would be a lesser tax.

Amendment negatived.