Financial Resolution No. 14: EXCISE — Mechanically Propelled Vehicles. Tuesday, 14 October 2008

Dáil Eireann Debate Vol. 663 No. 3 Page of 311

This resolution provides for the amendment of the Finance (Excise Duties) (Vehicles) Act 1952 and the Finance (No. 2) Act 1992, as extended by the Motor Vehicle (Duties and Licenses) Act 2008 with regard to rates of motor tax and fees for trade licence plates. It is important to note that the proceeds from motor tax are not paid into the Exchequer but are paid directly into the local government fund to support the funding of local authorities.

Deputy Bernard J. Durkan:    They need it.

Deputy John Gormley:    The fund is used predominately to finance non-national roads and the general purpose needs of local authorities. The fund is also supplemented with a financial contribution from central Government.

[532]The proposed increases announced today are 4% for cars below 2.5 litres and CO2 bands A to D; and 5% for cars above the 2.5 litre threshold and CO2 bands E, F and G.

Deputy Bernard J. Durkan:    Up they go.

Deputy John Gormley:    Rates on goods and other vehicles will also increase by 4% with no increase for electric vehicles. Trade plate licences will also increase by 4%.

The new rates will apply to motor tax discs and trade licences taken out for periods beginning on or after 1 January 2009. The increases maintain the strong incentive in the motor tax system, which this Government introduced last year, to switch to lower emission cars when purchasing new vehicles. While increasing any tax is not popular it should be noted that motor tax increases since 2000, including the increase now before the House, are below the inflation rate over the intervening eight year period. It is anticipated the proposed increases in motor tax rates will raise €40 million extra for local government next year.

On the experience of three months’ cars sales since the new VRT and motor tax systems came into effect we are already beginning to see a strong trend towards the purchase of new cars with lower emissions.

Deputy Tom Hayes:    Does the Minister know what is happening? Acres of cars are left untouched.

Deputy John Gormley:    That trend will assist Ireland in moving towards a lower emission economy. However, the tax changes were also introduced on a second principle of revenue neutrality. I intend to keep the motor tax system under review, in consultation with the motor industry, to ensure it meets these twin objectives over future years.

Deputy Paul Kehoe:    What about bicycles?

Deputy John Gormley:    However, the funding of local government must be broadened if it is to be sustained. As set out in the Green Paper on Local Government, which I published last April, I am strongly of the belief that we need to strengthen the role of local government in Ireland. The institutional and political reforms to be included in the forthcoming White Paper need to be accompanied by reforms of local government funding. We have begun that process with the new measures to broaden the revenue base of local government announced in today’s budget.

I will now highlight for the House the impact of the proposed changes for private cars and goods vehicles. These vehicles make up more than 91% of the national fleet. For private cars taxed on the basis of engine size the extra cost for most motorists will be between €7 and €13 a year — that is between 13 cent and 25 cent a week. This relates to more than 50% of the national car fleet which is made up of cars under 1400 cc. For the remainder of the car fleet up to two litre the annual increases will be from €14 to €24 and from two litre upwards an additional €30 to €75 per year. In summary, the extra costs for 94% of the car fleet, that is those under two litres, will be between 13 cent and 46 cent a week.

For private cars on the new CO2 based system, bands A to D will see an annual increase of between €4 and €17, while for bands E, F and G the annual increases range from €30 to €100. For goods vehicles the effect of the 4% increase will vary depending on the weight of the vehicle. However, I emphasise that 87% of goods vehicles are at the lowest level of charge, meaning owners will pay an annual increase of €11 or 21 cent per week.

[533]A 4% increase is also proposed for trade licences, or trade plates, used by motor traders on vehicles temporarily in their possession, in lieu of taxing such vehicles. The increase for a pair of trade plates will be €12. This financial resolution will cease on the enactment of the relevant Bill, which will be presented to the House at the earliest possible date.

Deputy Bernard J. Durkan:    It is €40 million extra.

An Ceann Comhairle:    I will take the spokespersons first and I will do my best after that. There is very little time and I do not think I will get around to everybody.

Deputy Phil Hogan:    It is interesting that the Minister is trying to justify an increase in motor tax as a green initiative or local government reform. It is a grab for cash.

Deputy John Gormley:    It is revenue raising for local government.

Deputy Phil Hogan:    It is a grab for cash the same as the Minister did last year.

Deputy Kathleen Lynch:    The Minister is admitting it has nothing to do with the environment.

Deputy John Gormley:    It is for local government.

An Ceann Comhairle:    Allow Deputy Hogan to finish.

Deputy John Gormley:    I am trying to answer Deputy Hogan.

Deputy Phil Hogan:    The Minister should not try to justify it on the basis that it is a major initiative for local government financing and local government reform. It is a grab for cash for local government.

Deputy Bernard J. Durkan:    Correct. Hear, hear.

Deputy John Gormley:    Yes, for local government, exactly. I agree with Deputy Hogan.

Deputy Phil Hogan:    Then why did the Minister include in his contribution the rest of the verbiage about local government reform as justification which we could have done without?

Deputy John Gormley:    That is true as well.

Deputy Tom Hayes:    There is a lot of that from him.

Deputy Phil Hogan:    I know the Minister does not like motorists because this budget has increased the price of petrol by 8 cent per litre and motorists have been hammered again this year with motor tax in the same way as they were last year——

Deputy Bernard J. Durkan:    Hear, hear.

Deputy Phil Hogan:    ——on the pretext that it is for local government financing.

The Minister failed to get enough money in the Estimates to justify the service of local government. He is asking local councils and councillors to impose more charges and hike up commercial rates paid by small business people to balance the books for his incompetence in not securing the necessary funds from the Department of Finance.

Deputy John Gormley:    No, I am not asking them to do that. I have never asked them to do that.

[534]Deputy Phil Hogan:    The Minister had his chance to speak and I did not interrupt him. I want to confirm that what the Minister proposes in conjunction with his colleagues shows his total contempt for the motorist. However, the Minister is in favour of the cyclist. A new initiative will be introduced for the cyclist while the motorist is hammered in the process. We rest our case on this side of the House as to where the Minister’s loyalty lies. I know he has a personal interest in this matter. However, as Minister for the Environment, Heritage and Local Government, I would have expected him to confirm an additional initiative on emissions for motor vehicles. The Minister could have proposed, but failed to do so, in the Motor Vehicle (Duties and Licences) Act earlier this year to backdate some of the VRT changes for second-hand cars. The driver file contains all the information needed to do that.

The Minister, however, is out of touch with what is happening in the motor trade. There are millions of euro worth of used cars lying idle in every motor sales garage because of the incompetent manner in which he implemented the VRT changes.

Deputy John Gormley:    The motor trade has backed me on this.

An Ceann Comhairle:    The Minister will have five minutes to respond at the end of the debate.

Deputy Phil Hogan:    The Minister is not good at understanding what is happening in the motor trade. Rather than increasing local government funding with this proposal, there will instead be a reduction in the tax take as I warned last year. The Minister fails to understand that the changes he made to VRT are not contributing to enhancing the amount of moneys going to local government. No car sales are taking place; forecourts are full of used cars. Figures from the Society of the Irish Motor Industry demonstrate a massive reduction in the number of used cars being sold.

I support the Minister’s aim in changes to VRT. However, he introduced the scheme on 1 July 2008, when consumer behaviour and practice should have informed him that 1 January is when people make up their minds on purchasing new vehicles. Unfortunately, common sense has not prevailed. The Minister is making another grab for cash. There will be an additional financial burden on goods vehicles at a time when their owners are under pressure to make ends meet because of the enhanced costs imposed by the Government over the past several years.

Deputy Bernard J. Durkan:    Hear, hear.

Deputy Phil Hogan:    It is not entirely the Minister’s fault. His predecessors have also brought about a rapid deterioration in the competitiveness of the economy and difficulties in the costs for small businesses. Fine Gael will not support a measure that is simply a grab for cash without any reform. The measure will take more money out of consumers’ pockets, particularly when an average of €2,000 will also be taken out of workers’ pockets with today’s 1% income levy.

Deputy Joanna Tuffy:    The Minister has acknowledged this is just a money-raising measure while at the same time trying to play the green card, as he did last year. To get the benefit of the new rating introduced in July, one has to be in the position to buy a new car. The point I made on last year’s budget still applies. When the Minister talks about changing driver behaviour, he is actually talking about changing consumption behaviour. Instead of buying one product, it just encourages people to buy another product. If one has the money, one can buy a new car. I note there is no increase in the tax on electric cars. Most people will not have the luxury of being able to buy one of these cars.

[535]The tax on vehicles, however, used for the carriage of eight or more persons which are used exclusively by youth or community organisations will be increased.

Deputy Michael D. Higgins:    Shame.

Deputy Joanna Tuffy:    An increase will be imposed on large public service vehicles which are used only for the carriage of children. If the Minister was serious about a green measure, those are the class of vehicles which should have had their motor taxes reduced.

The 8 cent increase on petrol is actually the carbon tax which the Minister referred to in his survey on carbon taxes earlier in the year.

Deputy Bernard J. Durkan:    That is correct. It is phase 1 of its introduction.

Deputy Joanna Tuffy:    The Minister has disassociated himself from that particular carbon tax. Why? It is because it will place a large burden on the average family. For all the talk about carbon taxes, the Minister will not admit to the very carbon tax in this budget.

As a Green Party Minister, if he really wanted to tackle carbon emissions from the transport sector, why is the Minister allowing the Department of Transport to make Dublin Bus take buses off the road? Why was that not his bottom line when he entered government? Why did he not make his priority putting more buses on the road, instead of measures such as this which are simply about raising revenue?

Deputy Arthur Morgan:    I can only describe this as a punitive tax. It is aimed at the many people who have either no or poor access to public transport services. It is aimed at small cars, engines under 2.5 litres, owned mainly by low-income families struggling to get to their place of work. They are probably thankful they still have a job and recognise they are under significant threat. No provision was made in the budget for dealing with public transport. The Minister, as Deputy Hogan said, has used smash and grab tactics to take money from low-income earners. It is disgraceful.

We all recognise that local government needs funding. It has not received proper funding since 1977 which has not been fixed by any Government since. An effort should have been made to correct that dearth of funding for local government, not putting it on the backs of those with small motor vehicles who use them to get to work.

The Green Party has abandoned rural Ireland and those in satellite towns around Dublin city who regard their cars as a necessity to get to work because of the disgraceful provision of public transport.

Whatever about the change on the road to Damascus, there was some scandalous change on the road to Government Buildings by the Green Party.

Deputy Bernard Allen:    It was sickening.

Deputy Kathleen Lynch:    I am glad the Minister has admitted this measure is nothing more than a grab for local government funding. He was clearly not successful in his budget negotiations. An Oireachtas committee, of which Deputy Hogan was a member, sat for two years investigating the high cost of car insurance. The tax on cars now costs more than insurance cost two years ago. It is outrageous and I do not understand how the Government believes people can afford it. If the Minister knew anything about how the motor trade operates, last December he would not have announced a change in VRT to be introduced in July. The repercussions of that decision were seen in Cork recently with the loss of many jobs in the industry.

[536]Whoever is advising the Minister on motor tax must have written this paragraph in the Budget Statement. It states:

In my language, and that of anyone else I have asked, this means the Minister is offering to pay people with a bike. Forget people’s salary, we will give them bikes. Not only will they get a bike, we will decide what colour it is because obviously different employers will have different colours. It will probably have a logo. As for the safety equipment, where would one be without a bell on one’s bike? What about a lamp? What about a dynamo or bicycle safety clips?

Deputy Enda Kenny:    The Deputy should not forget a puncture repair kit.

A Deputy:  And a luminous outfit.

Deputy Kathleen Lynch:    That sums up the Green Party’s attitude to public transport.

Deputy Pádraic McCormack:    This is certainly a tax on rural workers. The measure is anti-rural, as the Minister does not seem to realise that in cities such as Galway people must commute from Clifden, Lettermullen, Carraroe and various other places. It would be a nice thing to ask them to come in on a windy day on a bike from Lettermullen. If the Minister has ever been on that road, he will know what I am talking about.

The Tánaiste:    It would do the Deputy a world of good. It would invigorate him no end.

  Midnight

Deputy Pádraic McCormack:    Now that the road programme for that area has been abandoned, there will not even be a road to travel on because there is no money. Will the block support grant to local authorities be kept up to the level of inflation? If the Minister is genuine about local government, will the extra money raised by the new budgetary proposals be given to local authorities? He says he wants to improve local authority services and while that is a debate for another day, he will have a big job on his hands to improve them. Local authority services have deteriorated significantly. One cannot get anybody to answer telephones, return calls or reply to letters. When we call, we are told that programme managers are out and nobody knows when they will be back. The situation is impossible but we will have this debate on another day as there is not enough time now. I want to know, however, if the block grant to local authorities will be kept in line with inflation.

Deputy James Bannon:    It is evident from the content of this budget that the people have been mugged by Fianna Fáil and the withering Greens. This is another nail in the coffin of rural Ireland.

Deputy Bernard J. Durkan:    Out.

[537]Deputy James Bannon:    We were promised a modern rail system across the country and that rail links would be opened up throughout the country. Deputies O’Rourke and Kelly from my constituency promised that the rail link between two gateway towns, Athlone and Mullingar, would be opened up. We were also told the rail link in Killucan would be opened up, but nothing has happened. There is nothing in the programme for Government, as all the proposed ideas have been abandoned. The Government has carried on in a shameful manner. Now it is closing the barracks in Longford, which is vital to the local economy.

An Ceann Comhairle:    Come on now. The Deputy can raise that matter tomorrow. I call Deputy Broughan.

Deputy James Bannon:    I will deal with this issue tomorrow. Ministers should be ashamed of themselves. The decision will have detrimental effects across the midlands region. The public have been codded by the stealth taxes and levies imposed by this Government.

An Ceann Comhairle:    I call Deputy Broughan briefly.

Deputy Thomas P. Broughan:    A very disappointing aspect of today’s budget seems to indicate that the Green Party will be strapped into the Government——

Deputy Bernard J. Durkan:    Well strapped.

Deputy Thomas P. Broughan:    ——over the next four years until the last possible moment, when it will be decimated. One of the key points is that spending on public transport has been slashed by €70 million, which was announced by the Minister for Transport.

Deputy Paul Kehoe:    The Greens have gone yellow.

Deputy Thomas P. Broughan:    The capital budget for public transport was slashed by €70 million. A number of valuable projects, such as the western rail corridor, the Navan line, metro west and the Luas link-up, have been shafted. Many people are totally dependent on private transport, yet in addition to the 8 cent rise in petrol prices, the carbon levy tax will impose an extra 4%. In August, the number of new private cars registered fell by over 30%.

Deputy James Bannon:    The Government is wrecking our economy.

Deputy Thomas P. Broughan:    In September, the number fell by 40%. The Minister will attain some of his carbon emission targets by plunging the country into a total recession. We are heading into a full recession, to put the Government’s failure in context. I support cycling and many Members of the House spent a large part of their lives cycling. In the broader context, however, the Minister has failed in his mission by slashing public transport.

Deputy Bernard J. Durkan:    A few years ago, I was very concerned when the Minister chained himself to a tree in O’Connell Street.

Deputy John Gormley:    I did not, actually.

Deputy Bernard J. Durkan:    Since then I have become more concerned as to the circumstances whereby he came to be released. If he is allowed to continue on his present tangent, not only will he be cycling in front of squad cars, we will have the whole country cycling in front of squad cars because they will not be able to do anything else.

[538]Deputy John Gormley:    I thank the Deputies opposite for their contributions.

Deputy Pádraic McCormack:    He does not mean it.

Deputy John Gormley:    Yesterday, I was visited by a number of Labour Party and Fine Gael councillors who want to see the local government revenue base broadened.

Deputy Bernard J. Durkan:    I bet they do. Name them.

Deputy John Gormley:    They are colleagues of the Deputy’s. They have called for this. I think the Opposition is trying to have it both ways.

Deputy Bernard Allen:    The Minister buried his principles.

Deputy John Gormley:    On the one hand, Opposition Members say they want better local government and increased funding. This money is going towards local government. Either the Opposition wants to fund local government or it does not.

Deputy Arthur Morgan:    How?

Deputy John Gormley:    What are those ways?

Deputy Arthur Morgan:    The Minister wants examples, which I can give.

Deputy Bernard Allen:    Let them raise their own taxes.

Deputy John Gormley:    Deputy Morgan said that there has not been proper funding of local government since 1977. Let us see what the alternatives are. When it comes down to it, the Opposition does not have any real alternatives. That is the difficulty. Deputy Hogan is now imploring local councils not to agree to any rates increase. That is fine.

Deputy Phil Hogan:    I am glad the Minister noticed.

Deputy John Gormley:    I did notice. I am saying to them “Do not do that either”, but they do have to be funded.

Deputy Phil Hogan:    They do not do the Minister’s dirty work.

Deputy John Gormley:    This is one way of funding them. We are depending on the funding coming from motor taxation. It is a ludicrous system, but that is the system we have.

Deputy Bernard J. Durkan:    The Minister is in government now.

Deputy John Gormley:    We need to change that system.

Deputy Bernard Allen:    Change it then.

Deputy John Gormley:    That is precisely what we are doing in today’s budget.

Deputy Bernard Allen:    With bicycles.

Deputy John Gormley:    We are beginning to broaden the system. Earlier today, I listened to guffaws from the opposite side, along with sneering and taunts about cycling.

[539]Deputy James Bannon:    The Minister, Deputy Eamon Ryan, has wrecked the country.

Deputy John Gormley:    In most sophisticated European cities people promote cycling.

Deputy Phil Hogan:    On your bike in Donegal.

The Tánaiste:    No bother.

Deputy John Gormley:    That is the situation in Denmark and Amsterdam.

Deputy Enda Kenny:    They have proper cycle lanes there.

Deputy John Gormley:    So you people can go off in your big cars or cycle if you want.

Deputy Paul Kehoe:    The Minister has sold his soul and has sold people down the river.

Deputy John Gormley:    By the way, we have maintained investment in public transport. That is one of the achievements of the Green Party in government.

A Deputy:  The Minister’s colleagues are not going for green cars.

Question put: “That Financial Resolution No. 14 be agreed to.”

The Dáil divided: Tá, 82; Níl, 66.

Tá
Ahern, Dermot.	Ahern, Michael.
Ahern, Noel.	Andrews, Barry.
Andrews, Chris.	Ardagh, Seán.
Aylward, Bobby.	Behan, Joe.
Blaney, Niall.	Brady, Áine.
Brady, Cyprian.	Brady, Johnny.
Browne, John.	Byrne, Thomas.
Calleary, Dara.	Carey, Pat.
Collins, Niall.	Conlon, Margaret.
Connick, Seán.	Coughlan, Mary.
Cowen, Brian.	Cregan, John.
Cuffe, Ciarán.	Cullen, Martin.
Curran, John.	Dempsey, Noel.
Devins, Jimmy.	Dooley, Timmy.
Fahey, Frank.	Finneran, Michael.
Fitzpatrick, Michael.	Fleming, Seán.
Flynn, Beverley.	Gallagher, Pat The Cope.
Gogarty, Paul.	Gormley, John.
Grealish, Noel.	Hanafin, Mary.
Harney, Mary.	Haughey, Seán.
Hoctor, Máire.	Kelleher, Billy.
Kelly, Peter.	Kenneally, Brendan.
Kennedy, Michael.	Kirk, Seamus.
Kitt, Michael P.	Kitt, Tom.
Lenihan, Brian.	Lenihan, Conor.
Lowry, Michael.	McDaid, James.
McEllistrim, Thomas.	McGrath, Finian.
McGrath, Mattie.	McGrath, Michael.
McGuinness, John.	Martin, Micheál.
Moloney, John.	Moynihan, Michael.
Mulcahy, Michael.	Nolan, M. J.
Ó Fearghaíl, Seán.	O’Brien, Darragh.
O’Connor, Charlie.	O’Dea, Willie.
O’Flynn, Noel.	O’Hanlon, Rory.
O’Keeffe, Batt.	O’Keeffe, Edward.
O’Rourke, Mary.	O’Sullivan, Christy.
Power, Peter.	Power, Seán.
Roche, Dick.	Ryan, Eamon.
Scanlon, Eamon.	Smith, Brendan.
Treacy, Noel.	Wallace, Mary.
White, Mary Alexandra.	Woods, Michael.

Níl
Allen, Bernard.	Bannon, James.
Barrett, Seán.	Breen, Pat.
Broughan, Thomas P.	Burke, Ulick.
Burton, Joan.	Byrne, Catherine.
Carey, Joe.	Clune, Deirdre.
Connaughton, Paul.	Coonan, Noel J.
Costello, Joe.	Coveney, Simon.
Crawford, Seymour.	Creed, Michael.
Creighton, Lucinda.	Deasy, John.
Deenihan, Jimmy.	Doyle, Andrew.
Durkan, Bernard J.	English, Damien.
Enright, Olwyn.	Feighan, Frank.
Ferris, Martin.	Flanagan, Charles.
Flanagan, Terence.	Hayes, Brian.
Hayes, Tom.	Higgins, Michael D.
Hogan, Phil.	Howlin, Brendan.
Kehoe, Paul.	Kenny, Enda.
Lynch, Ciarán.	Lynch, Kathleen.
McCormack, Pádraic.	McGinley, Dinny.
McHugh, Joe.	McManus, Liz.
Mitchell, Olivia.	Morgan, Arthur.
Naughten, Denis.	Neville, Dan.
Noonan, Michael.	Ó Caoláin, Caoimhghín.
Ó Snodaigh, Aengus.	O’Dowd, Fergus.
O’Keeffe, Jim.	O’Mahony, John.
O’Shea, Brian.	O’Sullivan, Jan.
Perry, John.	Quinn, Ruairí.
Rabbitte, Pat.	Ring, Michael.
Shatter, Alan.	Sheahan, Tom.
Sheehan, P. J.	Sherlock, Seán.
Shortall, Róisín.	Stagg, Emmet.
Stanton, David.	Timmins, Billy.
Tuffy, Joanna.	Upton, Mary.

Tellers: Tá, Deputies Pat Carey and John Cregan; Níl, Deputies Paul Kehoe and Michael Ring.

Question declared clarried.

---

Last Updated: 28/09/2010 18:43:45

Page of 311