5 01 2011

Successive Chancellors have handicapped small business by continuing the war on the motorist

Successive Governments have effectively declared war on the motorist through ever-increasing fuel levy, inflation busting road tax increases, compulsory parking charges imposed on local authorities and more.

The current Government has now declared that it is to bring to an end this war by doing two things:

  1. Allowing local authorities to set their own parking charges
  2. Removing the limit on parking spaces permitted on new developments

What effect will these actions have? None. Local authorities are struggling with cuts and will not suddenly further reduce income by lowering or removing parking charges and the removing of the limit on parking spaces will have an impact so marginal as to be negligible.

If the Government really believes that is the way to end their war, somebody really ought to ask them to come down from cloud cuckoo land and live in the real world for a while, for at the same time as they announced these two acts of ‘pacifism’, they were wringing their hands while the levy on fuel increased promptly followed by an increase in VAT.

Is any other essential commodity subject to a tax on tax as fuel is?

We could drive our cars less and use public transport more, except inflation busting increases in fares have also just been announced.

And all of this adds up to problems for many small business owners; the same small business owners who the Government has announced will drive the economic recovery.

Yet again displaying an abject lack of understanding when it comes to vertically integrating its plans, the Government has overlooked the fact that for many small businesses, fuel and travel are essentials and when the costs of those go up, either our prices rise or our profits drop (or both).

Let’s take a small business like Cowan Global, driving to service clients in a variety of towns and cities around the country which have recently included Brighton, Cambridge, Felixstowe, Lancaster, Leeds, London, Manchester, Newcastle, Portsmouth, Reading, Slough, Windsor and York.

To get to these places in time to complete a full day’s work we usually drive, sometimes the night before but generally at times that make train travel impossible or, at best, hugely inconvenient not to mention more expensive. If we did take the train, the time train travel consumes should not be overlooked either; try planning a day return from Nottingham to Felixstowe (allowing time for a day’s work when you arrive) if you don’t want to take me at my word!

These miles are essential miles as far as running Cowan Global as a profitable small business goes. Yet, successive Chancellors have seen fit to offer no tax break for that essential mileage. The tax allowance per mile remains at the same 40p it was a decade ago when fuel and road tax were half the price and the cost of maintaining a car was somewhat cheaper too (parts and labour have all gone up and are subject to the new rate of VAT).

Now consider other types of small business, for example the shopkeeper, already increasing VAT, also has to bear increased costs because he receives his stock from companies hit by the costs of the war on motorists. Also, don’t forget those parking charges driving his customers to larger businesses offering free parking only a mile or two further away. And what of the haulage companies? Can you imagine what these price hikes keep doing to their competitiveness and their popularity with customers, not forgetting what they then do to their customers own prices?

Picture a small business operating in almost any sphere and you will find a business which suffers in some way because of successive Governments war on motoring and their ignorance of the damage is does to business because they have been incapable of vertically integrating policy.

If, as George Osbourne claims, we are all in this together then perhaps as vital tax revenue is raised via the motorist an amnesty could be called by offering tax breaks for essential business mileage whether it is consultants visiting clients, van drivers delivering groceries or HGV rigs delivering almost every commodity we need?

© Jim Cowan, Cowan Global Limited, 2011

Twitter @cowanglobal



2 responses

5 01 2011
Yvonne Parker

Spot on as always.

Also to be considered is the effective pay cut employees using their own cars for business use suffer every time fuel goes up while the 40p allowance remains unchanged.

16 11 2011

[…] have visited the Government’s war on the motorist on this blog before when I highlighted how fuel is the only essential commodity subject to a double tax (the fuel levy […]

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