Dear Chancellor The Retail Motor Industry Federation (RMIF) is the UK’s leading trade association for the industry. Its objective is to promote and protect the interests of all who own or manage their own businesses. With over 10,000 members, the RMIF is the largest organization representing the retail motor industry in the UK. The purpose of this letter is to set out some industry concerns that must be addressed in your forthcoming Budget 2007.

The economic and social contribution of small and medium businesses in the UK is widely recognized. Small and medium enterprises create jobs and wealth. Firms are a key source of job creation, enterprise and innovation, and play an important role in the long-term growth of the UK’s productivity. Present legislative burdens actively constrain businesses fulfilling their potential. The RMIF would like to take this opportunity to express both its concerns and set out some proposals for change.

We are aware that retail consumer confidence remains weak with many people concerned about employment. Insolvencies rose to a record level in the second quarter of this year. Despite the industry offering many excellent promotions and discounts, potential purchasers remain reluctant to commit to large purchases.

Fuel Prices and Fuel Tax

The current high price of oil on world markets is combined in the UK with high duty levels on petrol and diesel. The Chancellor’s decision in 2005 to freeze duty on road diesel and petrol was welcomed by industry but as fuel prices continue to rise we believe the Government needs to go further. The price of crude oil remains high and is close to the 1977 record levels. You will be aware that some analysts believe that the barrel price may reach $70. Despite the calls by the environmental lobby to raise taxes we strongly believe that such action would have serious national economic consequences.

Investment Incentives

The development of Bio Fuels is increasing and will slowly become more widely available in the coming years. At the same time the demand for hydrocarbon-based fuels will remain for the foreseeable future, as the average life of vehicle disposal is 12 years. No financial incentives are currently available to petrol retailers to invest in parallel fuel availability i.e. bio fuels. Retailers will have to continue to sell existing products and will have to develop new systems in parallel. Financial incentives are imperative if the provision of these new fuels is to be made readily in forecourts across the UK.

#AM_ART_SPLIT# Capital Allowances

Currently retailers do not get tax relief for expenditure on premises and clearly this policy disadvantages the retail sector. The RMIF recommends that the Government should include retail in the scope of the current Industrial Buildings Allowances (IBA). The purpose of the capital allowance system is to stimulate capital investment by individual taxpayers, and also to stimulate economic activity generally.

Road user charging

Road pricing must not be used as yet another tax income stream disguised as a contribution to the environment. Reducing the cost of road congestion is essential. Although road pricing is an acceptable mechanism to manage the road network it should form part of a coordinated package of measures to alleviate congestion and improve the transport network. Motorists must be protected against excessive charges set by governments, central and local, to raise money. Charges must be seen to be fair. The estimated £9 billion revenue that may be raised from road pricing must be reinvested into the transport network.

Any road user-charging package must include a substantial increase in road investment and provide additional funds for public transport. It should be revenue neutral and not be used as a stealth tax on motoring.

Small business regulations

All too often the need for good regulation is overlooked. The RMIF fully supports the work of the Better Regulation Commission and the Better Regulation Executive in seeking to identify and remove regulatory burden. We support the work that has been carried out in measuring administrative burden on business and await with interest the publication Government accepted in full.

The control of business rates by local authorities would essentially give rise to an increase in rates liability simply to raise local revenue. The RMIF strongly believes that the present system of central control should remain in place. The RMIF therefore urges the Government to retain centrally controlled business rates and not to bow to pressure from local authorities for local control.

Fuel duty point

Petrol retailers are required to pay the duty on the fuels they receive from the oil companies the moment it is delivered into their tanks. In other words, they pay tax on fuel before it is even sold. Oil companies are allowed a period of sixty days before they meet the same tax demand. Clearly the small business is severely discriminated against on this issue and the point at which the duty is paid must be altered to give greater support to the retailer.

It would be a pleasure to have the opportunity to discuss these proposals with you further should you wish to do so.

Yours faithfully

Sue Robinson, director, NFDA and Policy
Ray Holloway, director, Independent Member Associations