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SMMT warns on red tape and rising tax burden in budget submission

Higher taxes and more red tape could see more vehicle and component production moving to low-cost eastern European markets, says the Society of Motor Manufacturers and Traders in its pre-budget submission released on Friday.

SMMT chief executive Christopher Macgowan said: “Government must not burden automotive manufacturing in the UK off the European map. Manufacturers must have the confidence to develop their operations and government must help us meet the competitiveness challenge. That means a light regulatory touch and an integrated approach to regulation in environmental and transport policy.”

The SMMT asks the Government to avoid loading the UK automotive sector’s regulatory cost burden by including surface transport in the EU Emissions Trading Scheme, noting that the number of European type approval directives alone has risen by 25 per cent in the last decade.

Manufacturers are therefore said to be anxious that major UK policy reviews in areas like pensions, energy and transport do not impose additional costs.

The SMMT says grants are still vital to kick-start the market for low carbon vehicles.

Macgowan said: “Government has to embrace the concept of incentives in driving the market for the cleanest vehicles. Beating car buyers and commercial vehicle customers with tax penalties, while ignoring incentives, is absolutely counter-productive.”

On costs to motorists, the SMMT says consumers need time to adjust to the new car label tying VED rates to six colour-coded bands, introduced in July 2005, and says: ‘Government would be wise not to change the number of bands or increase VED for those already penalised through fuel taxation by choosing larger-engined vehicles. The precise effect on the market is unclear, but any move to increase tax could affect the commercial basis for some to manufacture in the UK’.

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