Vehicle excise duty on cars has remained unchanged at £40 a year since April 1975 and its value in real terms has fallen appreciably since then. An increase of £15 would be required to restore the real value to the 1975 level. But as I am already going a long way to meet the Government's objectives in transport and energy policy by substantial increases in the duty on petrol and derv, I am proposing a more limited increase in VED of £10 or 25 per cent., taking the duty to £50 a year. The same percentage increase will apply to all other licences except those for goods and haulage vehicles. The increased revenue will amount in a full year to some £150 million.
The tax burden on heavy lorries, in contrast to the position of the private car and the lighter lorries, fails to cover the costs which they impose on the community, such as wear and tear on the roads, even if no account is taken of the damage to amenities in the areas through which they pass. I think I should make a start on closing that gap, although in the case of the heaviest lorries the gap is too large to close in one move. The reasons for moving in this direction were set out in the Transport Consultative Document published last year and the European Community is expected to take a similar view later this year.
The lighter lorries already cover their costs to the community. So for vehicles up to 4 tons unladen weight I intend to raise the duty by about the same percentage as for the motor car. But for lorries above 4 tons and up to 6 tons I propose increases of around 30 per cent., and for those above 6 tons increases of around 35 per cent. For individual weight categories within these bands there will be some variation from these figures, This is necessary to ensure a smooth progression in the tax rates. For virtually all these vehicles the increases fall short of restoring the effective burden of the duty to its level two years ago. The total increase in revenue from these changes in VED on lorries will be about £60 million in a full year.