Those Tax Concessions

If the Department of Transport kept me waiting a long time in reply to my query about the tax concession still applying to pre-1947 cars not exceeding 7 h.p. under the former RAC rating (see Motor Sport Editorial for August), it is only fair to say that it has made adequate amends, by sending me a full explanation for a seeming anomaly, together with photostats from Hansard and a comprehensive taxation table. This shows that those who introduced this concession were not acting under any misapprehension, as seemed possible had they intended the taxation relief to apply to Austin 7s and similar baby-cars, and it is only fair to give the facts as now presented to us.

The matter came to a head in 1952, when the h.p. system of taxation on old cars and a £10 flat-rate tax on new cars was to be replaced by an overall flat-rate tax of £12 10s. on all cars, irrespective of age. It was then seen by some members of the Finance Committee that this would unfairly load the owners of the older small-cars, inasmuch as cars of up to 10 h.p. would henceforth be charged £2 10s. more per annum than formerly. This matter was raised in the House (Finance Bill-Committee) by Mr. Jay (Battersea North) in May 1952, his argument being that while it was desirable not to adversely influence the design of new cars (unduly long-stroke engines) by retaining the h.p. tax, it was inequitable to ask the owners of small-cars which were five years or more old to pay an increased tax while owners of newer cars of all sizes paid the same rate. As the tax since 1947 had been at the rate of 25s. per RAC h.p. for cars registered before that year but otherwise at the rate £1 per 100 c.c. of engine capacity, it was argued that, with the introduction of the £12 10s. flat-rate all-vehicles tax of 1952, equity for the older cars of up to to RAC h.p. could only be achieved by retaining for them the former tax rating or by reducing the proposed new flat-rate tax from £12 10s. to £10.

The Chancellor has said that to reduce his proposed new tax to £10 would lose the country £7-million (it is interesting that this was expressed as “sacrificing this sum to car owners”, just as if they benefited 100% from the Road Fund!). Mr. Jay pointed out that the solution must be to retain the tax concessions on pre-1947 cars, extending these to cover cars of up up to 10 h.p. Lt. Col. Marcus Lipton (Brixton) enlarged this argument, as he had done in 1947, 1949, 1950 and 1951. He conceded that while the 1952 Budget proposed increased tax on 1,300,000 cars, it did mean that owners of post-war over-1,000 c.c. cars were on a parity with owners of larger pre-war cars, numbering about a million. But it also meant that the smaller income-groups, running cars of 9 h.p. and below (already the 10 h.p. limit, which is what Mr. Jay really meant, had been departed from), of whom there were nearly 700,000, would be paying £2 10s. more than before. It was due, said the Hon. Gentleman, to the supply of new cars on the Home Market falling short of expectations that the difficulty arose. Those who had managed to obtain such cars were obtaining an “unearned increment”, whereas those unable to replace older cars or who ran old small-cars for patriotic or other motives were to suffer “penal treatment”. Lt. Col. Lipton further emphasised that, whereas the tax on pre-1947 Cars of up to 10 h.p. would rise, that on large-engined cars would be materially reduced. He had the support of Mr. Eric Fletcher (Islington East) who pointed out that the Chancellor’s 1952 proposals would very considerably benefit owners of large pre-1947 cars, which he quoted as the “Rolls-Royces, the Daimlers, the Bentleys and all the expensive fashionable large cars”. He said he had no objection to these concessions “if the Tory Party thought it a good thing to give away revenue in that manner”. But, he asked, “why should a man who has an old car, perhaps a 7 or 8 h.p. car going back to 1938 or 1939, and who for years had been paying £10 in tax, have to pay £12 10s. a year?”.

The then-Financial Secretary to the Treasury, Mr. John Boyd-Carpenter (whom the 750 MC recently implied to be the person who once raced Austin 7s at Brooklands) parried the proposed Amendment on financial grounds, saying it would cost a total of £2,700,000. He was quick to point out that the pre-1947 10 h.p. car-owner would pay the same as everyone else. Those owning pre-1947 cars of 9 h.p. would pay 25s. more, actually less £10 to £12 10s. He argued that pre-1947 cars of 8 h.p. would be in the same position as all post-1947 cars, which he conceded might be “a serious matter to some people”. He continued: “It is only when we get below the 8 h.p. car, to the 7 and 6 h.p. cars, that the increase becomes proportionally fairly substantial”.

It now becomes clear why the 1952 concessions, as eventually granted, did not embrace the Austin 7s and other 8 h.p. cars. Before he granted them, Mr. Boyd-Carpenter tried to deflect the need to do so by pointing out the small numbers of low h.p. cars involved. He put those of 7 h.p. in 1952 as under 10,000 and those of 6 h.p. (which would suffer an increase of £5 a year) as fewer than 100. He felt it difficult to be sure whether small cars were owned by wealthy or less wealthy people. (A spacious Politicians’ kind of comment!) Mr. Boyd-Carpenter tried to laugh this off by remarking that “There are Hon. Members of this Committee who own cars, which can be seen in Palace Yard, of quite inconspicuous dimensions and I believe that one of the 6 h.p. cars belongs to an Hon. Member. (Could this have been an allusion to the smart blue Fiat 500 in which the Rt. Hon. The Lord Howe used to commute to the House of Lords?) The argument ground on. But the outcome was that Mr. Boyd-Carpenter agreed to the tax concessions on the pre-1947 6 and 7 h.p. cars, as this would cost only about £15,000. It is now clear why the majority of small-cars in use in 1952 which were of 8 h.p. or more, failed to benefit, in spite of the Financial Secretary, in one part of his speech, referring to “the pre-1947 Austin Seven type” of car as being probably on balance owned by people less-well-off than the average of car-owners, although even then bests very cautious, saying that it was “awfully difficult to draw any firm distinction”.

I have gone into this matter at some length, because it explains how what might appear an anomoly was based, 25 years ago, on a degree of sound common-sense. It is of interest because these concessions, although increased along the years, (in 1952 the 7 h.p. car paid £10, today it pays £36) still stand, and as I think it will be of value to historians, I append the taxation-tabls. kindly provided by Swansea’s Department of Transport. -W.B.