Dáil Éireann debate -
Tuesday, 19 Feb 2002

Vol. 548 No. 5

Written Answers. - Vehicle Registration Tax.

Austin Deasy

Question:

70 Mr. Deasy asked the Minister for Finance if he will give details of the VRT as it applies to cars in this country; the annual revenue accruing to the Government as a result of this tax; if it is unique within the EU; the way in which it affects the price of cars overall; and the Government's proposals to abolish this tax. [5602/02]

Minister for Finance (Mr. McCreevy):

Vehicle registration tax was introduced in 1993. It replaced the previous motor vehicle excise duty which was abolished when the EU Single Market came into being. VRT is an internal registration tax payable on the first registration of a vehicle in the State and applies to new and second hand cars.

The rates of VRT on cars are as follows:

Engine Capacity	Rates
0 – 1400 cc	22.5% of open market selling price
1401 – 2000 cc	25% of open market selling price
2001 cc +	30% of open market selling price

VRT is an important source of revenue for the Exchequer, especially given this Government's strategy of reducing income tax and corporation tax. Receipts from VRT in 2001 were in the region of €790 million, while receipts in 2000 were in the region of €1,000 million. To recover this amount of money in alternative taxes would require, for example, a 36 cent per litre excise duty increase in the price of petrol or an increase in the standard rate of income tax of over two percentage points.

Ireland is not the only member state which has a tax on vehicle registration. Eight other countries have a registration tax, including Denmark, Finland, Greece and Portugal, some at higher levels than apply in Ireland. These taxes are operated in a variety of ways and, as such, are not directly comparable with VRT as applied in Ireland. Germany, Luxembourg, Sweden and the UK do not charge registration tax and France and Italy charge the tax at a nominal rate. Many other countries also tax fuel at a higher rate, including the UK. All these factors must be borne in mind in making cross country comparisons.

The Government has no proposals to abolish VRT.