No SET change disappoints operators
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from our political correspondent • The Chancellor of the Exchequer's Budget decision not to change the Selective Employment Tax has disappointed the road transport industry.
There had been hopes that the Chancellor might correct an anomaly which was highlighted in Prof W. B. Reddaway's report on his inquiry into the tax published last month (CM March 6).
This arises from the fact that a manufacturer's warehouse distribution depot ranks as a "manufacturing" establishment and is exempted from SET, while wholesalers cannot obtain exemption for their own transport departments even if they are operated by an associated company.
The only remedy for a wholesaler is to have his goods carried by an independent operator. This solution, as Reddaway pointed out, has not proved popular because of the advantages of "own delivery": security, guaranteed delivery, and reduced need for packing, and so on.
A factor in the Chancellor's "no change" decision is likely to have been Reddaway's general conclusion that SET has not led to any significant switch of business by distributive organizations which have to pay the tax, to road transport firms which receive a refund.
Chancellor Jenkins told MPs that correction of this and other anomalies will amount to a major refashioning of the tax which he could not embark on this year.
"Since I am not proposing to increase the rates of SET, I am afraid that this means that I can make no concessions to wholesalers," he said.
"The cost of exempting the wholesalers would be some £50m a year and I cannot afford to forgo this revenue if I am to meet claims upon me in other fields for which, as I see it, a still stronger case can be made Out."
RHA regrets
• The Road Haulage Association is disappointed that the Chancellor has not appreciated the need to take off some of the enormous bonus taxation, particularly at a time when the other costs are increasing so rapidly. The RIIA regrets also that none of the provisions in the Budget is designed to help the small operator.