Budget - AA outrage at Insurance Premium Tax hike
The AA has criticised "an outrageous hike which could well backfire by leading to an increase in uninsured drivers", after the Chancellor today said that Insurance Premium Tax will be increased from 6% to 9.5%
The IPT increase will mean an extra £17.50 on a £530 average Shoparound premium, according to the AA benchmark British Insurance Premium Index.
The IPT hike will also hit the costs of breakdown cover and will mean the AA (or customers) will have to pay millions of pounds more per year in tax.
The government also announced that it will revise Vehicle Excise Duty (VED) bands for new cars and set up a new Road Fund.
There will be a consultation on the MOT with a proposal for new cars to have their first MOT after 4 years, rather than 3.
In an AA-Populus poll in September 2011, 55% (16,961 responses) supported the first MOT at 4 years not the current 3, and 23% were 'strongly' in support.
The Chancellor announced a continued freeze on fuel duty this year although 10% of all tax still comes from motoring.
The AA had stated clearly that the government should avoid tax hikes on motorists in the Budget. A week ago, 73% of an AA-Populus poll of 25,810 AA members said they feared a post-election rise in motoring taxes. Among blue collar workers, that worry rose to 83%.
This is an outrageous hike which could well backfire by leading to an increase in uninsured drivers
Edmund King, AA president
"Three quarters of AA members were right to be worried that the government might hike motoring taxes after the election. Whilst fuel duty has been frozen every driver will be hit with the increase in Insurance Premium Tax. This is an outrageous hike which could well backfire by leading to an increase in uninsured drivers" says Edmund King, the AA president.
"Simply piling on IPT tax could backfire on the government."
"We still need to see the details of the VED review but a return to Lloyd George's principle of the Road Fund is a welcome step, although the pot will have to be increased if it is to cover the millions of potholes on our roads."
(8 July 2015)