MPs slam car taxes

The Inland Revenue has been accused in a major Commons report of deliberately obstructing attempts to curb car use.

The environment, transport and regional affairs committee said witnesses to its inquiry into deputy prime minister John Prescott’s white paper on integrated transport criticised the Revenue ‘for seeking to thwart the White Paper’s proposals at every turn’.

Praising this year’s ‘breakthrough’ Budget, the committee greeted the removal of the employee tax charge on works buses and subsidies for public bus services. It also backed the tax boost for cyclists and the changes to company car taxation from April 2002 which replace the incentive to drive unnecessary business miles with one to use more fuel efficient, less polluting vehicles.

But MPs pointed out the new measures would be ‘tax neutral’, and demanded the Revenue rethink its opposition to taxing workplace parking benefits – claimed to be worth £5,000 a year in some cities.

The report said the Revenue insisted ‘the practical difficulties of taxing the value of the benefit represented by having a free workplace parking space had not diminished since 1988’ when the benefit was taxed.

The committee was told by Boots that it had been threatened with a £500,000 bill for tax liability for the past six years for providing bus services to its Beeston site.

The company complained that the Revenue regarded its payments to bus companies as a taxable benefit in kind although the buses were also available for use by the public, while employees paid the same fares as other passengers.

The issue has already been raised during Commons debates on the Finance Bill, with former Labour Treasury minister and Public Accounts Committee chairman Robert Sheldon calling for the cost of travel to work to be recognised in the tax system.

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