Saturday, 30 May 2009

Happy car owners, miserable tax payers



Why hasn't the car scrappage scheme generated mass protests from taxpayers? It must be because we have become totally numb to this kind of fiscal stupidity. Nothing shocks us anymore.

This scheme has a budget of £300 million. Since the payment for each car scrapped is £2,000, this means that 150,000 lucky new car owners will benefit. There are approximately 35 million taxpayers. This scam will take approximately £8.50 from each one of them and arbitrarily give it to a tiny minority of people who want to buy new cars.

What is the logic of this brazen redistribution of wealth? According to Mandelson, it is to boost the car industry. Why is car production so special? Why shouldn't fish and chip shops or pubs be protected with tax payers money? How about internet cafes? There are plenty of firms suffering right now, yet there are no taxpayer financed product scrappage schemes designed to boost sales.

There is also a spurious environmental argument floating around. Cars older than ten years are supposed to pollute more. Yet, we all know that the reduction in CO2 emissions from this scheme will be marginal. Besides, new car owners will have an extra £2,000 in their pockets, part of which will be spent on petrol, negating the minimal reduction in C02 emissions.

So why did the car industry receive this unpardonable subsidy? They shouted the loudest; they complained the most; they scared New Labour with hairy stories of job losses, while other firms were silently shedding jobs. It was a classic case of corporate welfare, with ordinary taxpayers silently subsidizing the personal consumption of a minority.

9 comments:

Anonymous said...

The taxpayer contribution is £1000. The car company has to make up the other half. So they have a headline of £300 million, but its just another fake government statistic. There is not a snowballs chance that 300,000 owners of rotting hulks are suddenly going to splash out on a new car.

Anyway, since the VAT included on a car of £7660 retail will be £1000 then its unlikely the actual cost in money of the great giveaway will really result in any cost to the exchequer.There are few cars even discounted that retail at that.

dearieme said...

Lord Mortgagefraud isn't ageing well, is he?

electro-kevin said...

"Why shouldn't fish and chip shops or pubs be protected with tax payers money?"

Oh but they are, and with this very same money. And to an extent the taxpayer is being protected too: From the cost of skilled workers claiming benefits.

The people being really conned are the car buyers themselves. The £2000 'saving' is lost in depreciation as soon as the car leaves the forecourt.

The really big problem is that we pay far too much for cars here in comparison with other countries.

boiling frog said...

I need to trade my 10 yr old automatic for a manual soon (for my nearly 17yr old son) I therefore qualify for the £2000 giveaway - if I buy a new car. I reckon I am still better off buying another 6yr old with 60000 miles on the clock and keeping it for four years like I did with this one.
How does everyone else see the arithmetic on this "giveaway"?

Anonymous said...

There is also a spurious environmental argument floating around. Cars older than ten years are supposed to pollute more.They do.Yet, we all know that the reduction in CO2 emissions from this scheme will be marginal.CO2 is not the pollutant under discussion here.

Feel free to get acquainted with Google's search service at any time.

Anonymous said...

I need to upgrade my 14 year old banger this year but buying new is very unwise, even with the 2000 scrappage discount.

It just about works if you are buying the smallest cars, then 2000 is a big chunk off. But for a decent mid range 4-door hatchback it doesn't make sense. 2 year old cars are so cheap at the moment I'll probably just get one of them.

frug.

yudansha said...

Anon at 03.32

There is the issue of scrapping a car with a few years life left in it.

Not really environmentally friendly.

Anonymous said...

yudansha, do you think you are talking to someone who cares about facts?

Another Anon

Mick said...

I thought about this long and hard - but my 12 year old banger is going to the scrappers and being replaced with a Fiesta with 18000 on the clock.

far better value.

If they'd allowed a trade in for cars up to 2 years old, like in Germany, I probably would have gone for it.