Tax burdens affecting the car market

Car dealers have called on the government to reduce the tax burden placed on motorists as the rising costs associated with driving continue to threaten the industry.

Given the current economic climate, dealers believe that consumers are already cautious about buying a car and a reduction in tax burdens would be a welcome relief.

Sue Robinson, director of the RMI National Franchised Dealers Association (NFDA), said the government could "ease" consumers’ worries by clarifying its tax intentions.

"Confusion over vehicle excise duty (VED) changes due to come into force next year mean that it is more difficult to calculate how much motoring is going to cost.

"Many consumers will wait to see how the cost of motoring and the overall economy plays out over the next few months," she predicted.
But the government has announced plans that will lead to nine million motorists losing out.

Ashton Berkhauer, insurance expert at uSwitch.com, explained how the new laws could affect drivers of used cars.

"Drivers of older cars will find that their road tax will cost as much as 18 per cent of the value of their car. For example, a 2001 Volkswagen Golf has a second-hand value of £2,400. Under the new road tax system owners of this vehicle will pay £260 in tax – 11 per cent of the car’s value."

If economic conditions continue to worsen, it is likely that consumers will avoid purchases unless they are absolutely necessary and Ms Robinson called on the government to help the motor industry.

"Reductions in interest rates, efforts to stabilise fuel costs, and clarification over the future cost of motoring are all within the government’s remit, and we urge them to look into these areas urgently," Ms Robinson added.

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