CRASH TAX BANDONED
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GOVERNMENT proposals to levy a crash tax on vehicle insurance premiums were dropped this week — and this could save the industry £30 million a year.
The plan, which called for a seven per cent levy on premiums, could have increased insurance costs by as much as £90 a vehicle if it had been enforced.
But this week Social Services Secretary, David Ennals, told the House of Commons he was abandoning the plan as being "administratively expensive and having inherent practical difficulties."
Clause
It was hoped the levy would pay part, if not all, of the b=15 million a year that road accidents cost the National Health Service. At present only around .E1.5 million is recouped by the Government.
Under the scheme, a clause that has been contained in every Road Traffic Act since 1930 would have been activated for the first time.
The clause states that drivers involved in accidents are entitled to neither National Health treatment or National Insurance payments — and it applies to all professional drivers.
Mr Ennals proposed that his department should notify vehicle insurers of the amount needed to meet NHS costs for each vehicle, at a flat rate per vehicle.
Relief
Now discussions have found that the tax would cost as much as E1 per vehicle to collect.
Reaction from the industry at the news of the abandonment has been one of relief.
A spokesman for the Road Haulage Association commented: "We welcome the Minister's decision. The proposal didn't make sense and w. have opposed it from the start.
At the Freight Transport. Association a spokesman thought ditching the new tax a very good move. "We have campaigned against the tax very strongly and we are very pleased that the Government has seen the error of its ways."
But he warned: "We will be watching closely to see that they don't try another back door way to impose the tax."
The British Insurance Association regarded Mr Ennals' statement as "a logical out come of discussions that have been going on for six months with Department officials, the insurance companies and ,Lloyds.
"We have pointed out the complexity of such a system and the heavy administration costs that would be involved," said a spokesman.
In his statement abandoning the tax, Mr Ennals said he did not intend to levy a charge to cover the costs of the health service in any other way at present.