Severn Bridge may not pass VAT cut to drivers (From South Wales Argus)

Severn Bridge may not pass VAT cut to drivers

9:30am Saturday 29th November 2008

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SEVERN Bridge bosses could pocket more than £4 million if they don’t pass on the 2.5 per cent VAT cut to motorists.

A decision not to cut VAT on Severn Bridge tolls would be “highway robbery” and a “disincentive” to come to South Wales, according to politicians calling for the cuts to be passed on.

Severn Bridge Crossings PLC are only “considering” passing on the 2.5 per cent VAT cut from 17.5 per cent to 15 per cent to bridge users.

But they are still set to go ahead with their annual toll rise in January which would see prices for cars go up to £5.50.

On average 75,000 use both bridges to come into Wales every day – more than 2.5 million people every year.

If the VAT cut is brought in by the government for a year, the company would gather £4.1 million.

As yet it has not been decided exactly when the cut will be brought in or for how long.

In 2003 when VAT was introduced, Severn River Crossings didn't raise toll costs and have since made VAT inclusive of toll fare.

Therefore, said a SRC spokesman, the annual increase was based on inflation and had nothing to do with VAT.

But because the company will benefit from the cut, questions are being asked as to why motorists shouldn’t benefit too.

South East Wales AM Mike German said: “I don’t want considerations, I don’t want to see them pocketing the money – it’s scandalous.

“"If the VAT cut is not passed on to Bridge users, then the bottom line will be that Wales is being robbed every single day. It's highway robbery.”

Mr German is writing to the transport minister who he says has the power to stop the toll hike and even reduce it.

Monmouth MP David Davies has echoed the views of Mr German and is also writing to the transport minister to ask for assurances that there will be a reduction.

Blaenau Gwent AM Trish Law says the bridge toll is “already a tax on the motorist” and acts as a “disincentive to businesses looking to relocate to South Wales.”

Newport West AM Rosemary Butler said the decision not to pass on the cut would “go against the spirit of what the government is trying to do.”

“The government is trying to encourage people to spend in order to help the economy, but if organisations like this don’t pass on the cuts in VAT then commercial enterprises all over the world will suffer, including the bridge company,” she said.

An Assembly transport spokesman declined to comment on the story.

• The Argus is passing on the 2.5 per cent VAT reduction to advertisers.

How the VAT changes would affect tolls

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