TAX ON HEAVY FUEL

Evening Post, Volume CXIX, Issue 128, 1 June 1935, Page 30

TAX ON HEAVY FUEL

DIESEL PROGRESS AFFECTED

Writing in the London "Daily Telegraph" Mr. A. G. Throssell says that manufacturers and operators of heavyoil engined road vehicles are agreed in the view that the Chancellor of the Exchequer in his Budget dealt the development of that type of motor a blow by raising the tax on its fuel from Id to 8d per gallon. Opinions differ as to the severity of the blow. "Some hastily expressed views on the Budget afternoon must have been uttered in ignorance of the fact that Mr. Chamberlain was reducing the vehicle tax on these vehicles by a considerable amount. Diesels after August 1 will pay exactly the same taxes as petrol vehicles, not more, and of course the increased fuel tax will make no difference to foreign buyers of British-made engines. The tax applies only to heavy oils used in road vehicles. Some levelling up of taxes on the rival types of engine was expected by the industry. Not the worst pessimists,' however,- expected Mr. Chamberlain to raise the fuel tax straight to Bd."

• Mr. Norman Hardy, head of one of the largest firms actively engaged in the design, building, and use of the heavy-oil engine, said he regarded the new tax as a distinct setback. Its effect, he estimated, would be to limit the economic use of Diesels to vehicles travelling more than 30,000 miles per annum. The Diesel engine was more economical, but its first cost was much higher. That extra first cost could be recovered only if the vehicle was in practically constant use or on regular long-distance work. On a fleet of 45 vehicles used as buses, the new tax would mean an addition of £5000 a year to operating costs. This limitation of the use of the heavy-oil vehicle must retard its development, and it would adversely affect the progress of that form of engine for use in the air.

A director of another leading firm interested in this type of motor, while agreeing that Diesel progress would suffer —it. would, for. instance, no longer be economic to convert a petrolengined vehicle to heavy oil—said that the tax did not destroy the inherent advantages of the Diesel. A heavy goods vehicle doing five miles to the gallon on petrol could do eleven miles to the gallon on heavy oil, besides being immune from fire risks. These advantages would continue to weigh with vehicle operators, both at home and abroad.

The oil distributors are to be responsible for collecting the tax and for its payment to the Customs authorities. At present, with a total of 8000 heavy-oil vehicles in use, it will be fairly easy to check fuel consumption. In some cases separate fuel tanks for road vehicles and aircraft or stationary engines may be necessary. Possibly the oil companies will introduce a separate brand for road vehicle oil fuels.