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Farm Vehicles Penalised Again in Budget
13/03/08

Reacting to the Budget announced today by the Chancellor, NFU Scotland has said that the reform of the road tax (vehicle excise duty) system from April 2009 and a further 2 pence hike in fuel duties from October of this year, will heavily affect farmers and all those living or working in rural Scotland.

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NFUS has stressed that 4x4 vehicles are essential for farmers and changing the tax bands to penalise more heavily polluting vehicles will penalise farmers who have no choice but to use these types of vehicles for business purposes. The key for farmers is band G. An increase in the band G rate vehicle excise duty rate will have a detrimental impact on farm businesses since farmers are not able to purchase a vehicle that has lower CO2 emissions and still be able to do the job required of it around the farm.

A ‘showroom’ tax will also apply from April 2010 as buyers of more heavily polluting vehicles will have to pay additional tax upon purchase, again penalising those who need to use such vehicles for business purposes.

On top of this, a two pence increase in fuel duty is an unacceptably heavy penalty for individuals with no practical alternatives. The duty rise will be postponed until October but will nevertheless have a huge impact on farmers and all those in the countryside.

On top of this, red diesel duty for off-road, agricultural vehicles will also increase by two pence per litre from 1 October, significantly above inflation.

The duty differential for biofuels will be abolished in 2010 and from then the Renewable Transport Fuel Obligation (RTFO) will provide the total incentive for biofuels although this announcement has come as no surprise.

Some positive news includes a commitment to reduce regulatory burden on small businesses.

NFUS President Jim McLaren said:

“The fundamental principle here is that farmers drive 4x4s because they are essential tools for the job. The Chancellor is clearly trying to penalise those driving big cars in city centres, but hikes in excise duty next year will also be penalising those who have no alternative. Particularly after the dismal year faced by many farmers in 2007, an extra ‘showroom’ price hike on what is an essential business tool is another slap in the face.

“The increase in fuel duty of two pence per litre from 1 October exacerbates the problems being faced in rural areas. Not only do those living in the countryside have to deal with largely poor public transport but higher fuel prices are also having a huge impact. An implementation delay of six months really won’t address any of the real problems.

“The Chancellor has announced he will maintain the differential between red diesel and normal road diesel, but this means a rise in red diesel duty of 2ppl in October as well. All duty increases should be put on hold until world fuel prices are less volatile and not simply for six months.

“On a slightly more positive note, the Chancellor did make a fleeting mention of a desire to reduce the burden of regulation for small businesses and so I look forward to learning more about how he plans to do this.”

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NFU Scotland