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RMI describes Budget as "smoke and mirrors"

25 March, 2010

RMI Petrol has warned that the Budget announcement was a case of "smoke and mirrors again". Commenting on

the fuel duty decision in yesterday's Budet, RMI Petrol chairman Brian Madderson said: "The Chancellor failed to mention that, in addition to the 1.0 ppl duty increase from 1 April, he has already taken measures to claw back a duty incentive provided to the refiners for biofuels production. This latter measure will result in an increase to the cost of product by up to 1.0 ppl also from 1 April.

"Thus the real increase to the motorist at the pump will be 2.0 ppl plus the VAT multiplier equating to around 2.35 ppl some 135% more than might have been perceived from his speech to the House.

"This size of increase does not sit well with his promise that 'this is a Budget to secure recovery...' especially with further duty increases now advised for 1 October 2010 and 1 January 2011.

Meanwhile, Sue Robinson, RMI director, added that the Budget announcement provided a few positives for the retail motor industry but in the main did not address the key issues affecting the industry. She said: "The Chancellor appeared to play for political gain and did not focus on many of the key issues facing businesses today following the recent difficult economic period."

According to Robinson, the following measures will help businesses to some degree:

Annual Investment Allowances

Robinson described the increase in the annual investment allowance to 100,000 per year as a "welcome incentive for businesses to invest in capital equipment an infrastructure". However, she said this had not been taken far enough for some businesses that make large scale capital investment, such as truck fleet operators.

Business Rates

According to Robinson, "The announcement to halve business rates for one year from October 2010 will help many businesses, but this does address some of the anomalies in the rating system particularly for SMEs."

Tax Payments

"The announcement to extend businesses' ability to stage VAT and other tax payments will be very welcome for businesses and will help cash flow immensely; we are pleased that this has been extended for more than one year."


The RMI said it was disappointed that certain key issues affecting the motor industry were not addressed, including:

National Insurance

"The retail motor industry along with the UK in general has seen difficult employment conditions. The proposed 0.5 per cent increase in employee and employer national insurance contributions from April 2011, will significantly increase employment costs in the sector and is likely to lead to businesses needing to review their staffing numbers and has the potential to lead to staff cuts. We continue to urge the Government to reconsider this increase."

Small Business Corporation tax

"Small businesses are the driving force of the UK and need support during this critical period of recovery. We are concerned that the Government did not consider a reduction in small business corporation tax to help SMEs during this difficult economic period."

First Registration Tax

"We are concerned that the Government is still going ahead with the first registration tax on new cars from 1 April 2010. The new car market is likely to see some uncertainty with the Scrappage scheme coming to an end at the end of March and it would seem extremely bad timing to introduce a tax increase on new vehicles at the same time as an incentive to buy is removed."