Dáil Éireann debate -
Wednesday, 28 Jan 1981

Vol. 326 No. 2

Financial Resolution No. 2. - Financial Resolution No. 7: Excise Duties on Mechanically Propelled Vehicles.

The Taoiseach

I move:

(1) THAT section 94 of the Finance Act, 1973 (No. 19 of 1973), be amended by the substitution of "£20" for "£10" (inserted by the Finance Act, 1980 (No. 14 of 1980)) in paragraph (b) of subsection (2).

(2) THAT this Resolution shall have effect—

(a) as respects licences under section 1 of the Finance (Excise Duties) (Vehicles) Act, 1952 (No. 24 of 1952), taken out for periods beginning on or after the 1st day of March, 1981, in respect of specified vehicles (within the meaning of the said section 94) to which the said paragraph (b) applies, and

(b) as respects other mechanically propelled vehicles to which the said paragraph (b) applies and in respect of which licences under the said section 1 are taken out for periods beginning on or after the said 1st day of March, 1981.

(3) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1927 (No. 7 of 1927).

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): These resolutions, amongst other things, increase the tax on motor vehicles with a h.p. of 16 and under from £10 to £20. In other words it doubles the tax on motor cars. Deputy Bermingham and myself said we would have expected a more imaginative budget from the Taoiseach — because it is the Taoiseach's budget without doubt. The Taoiseach tells us here that he must rely on the old reliables like cigarettes, alcohol, petrol and car tax. That was not always the way with the Taoiseach and his party. In 1977 they had the bright idea of abolishing car tax. On Page 5 of their manifesto under the heading “The Economy: The Real Crisis” they were to work magic and one of the prescriptions to cure what they said was the real crisis was to abolish annual road tax on cars up to and including 16 horsepower from August 1977, immediately the election was over.

When that was announced this party said that if Fianna Fáil got into power and did that they would tax petrol. The people got a solemn assurance from the then leader of Fianna Fáil that in no way would the revenue lost on car tax be made up by a tax on petrol. In spite of that solemn assurance, last year 20p tax was put on petrol and 15p this year. That is the difference between any tax put on in 1974 and the present: the tax put on now is being imposed contrary to a solemn undertaking given by the Taoiseach's predecessor. Not only is that tax imposed but we find that when road tax, as it was called, was abolished in 1977 it was replaced by a £5 registration fee and last year that fee was increased to £10. This year it is being increased to £20. In fact we have the tax on cars restored and we have petrol taxed to the tune of 35p. The motorist is now in a much worse position and much worse off financially than he was before this famous manifesto. The Taoiseach's only solution when he last spoke was that cars would consume less petrol if they were better serviced but the same Taoiseach allows the roads to run down last year and the year before to such an extent that it is impossible to keep cars in any reasonable condition. If he inquires from garage owners he will find that under his management of the economy people are not servicing their cars because they cannot afford it and many garages are on a three-day week. That is the position.

The gravity of this increase in road tax is that it is evidence of a confidence trick on the electorate because in 1977 Fianna Fáil undertook to abolish car tax and gave a solemn assurance that they would not replace it with petrol tax. They have not only replaced it with petrol tax but they are now bringing back the car tax itself. Could anything be more despicable or more of a confidence trick on the people?

I understand this budget is getting a very bad reception all over the country. No wonder, because it is not only a harsh budget but a budget which shows the Fianna Fáil Party as having utter contempt for the people.

Mr. M.P. Murphy

These resolutions require particular attention and we should look at both of them with deliberation because in the think-tank manifesto of 1977 one of the most spectacular things was the abolition of car tax on cars up to 16 horsepower. Earlier in dealing with the petrol Resolution I said and I repeat now that since the State was founded and since Dáil Éireann began to deliberate here a proposal was never made by any Deputy of any party that car tax should be abolished. It was certainly not done in my time and as far as I can see by reading through the debates of the twenties, thirties and forties, not in those periods either. Roads had to be maintained. People generally were complaining that roads were not up to standard. Local authorities were agitating for more money through the tax fund for the maintenance or improvement of roads, national, secondary, main and county roads.

The previous Government faced that kind of agitation as all Governments did because our roads are well below standard and particularly below West European standards. This agitation was being carried on very forcefully by the general public through their local authority members and executives without any request from any Member of the House or from any Party. Nobody went so far as to curry favour with the public by saying: "You must not pay tax on your cars; roads can be maintained without your having to pay this tax." But in their desire to get back to power in the 1977 general election the group headed, I understand, by the former Minister, Deputy O'Donoghue with three or four other think-tank members, this — I will not use the term "gang of four" because I do not like it but somebody used it earlier and described them as the Gang of Four — Group of Four or Group of Five — devised this great idea to tell the general public they would not have to pay car tax. They told them they could maintain the roads without the public having to pay tax. Where was the money to come from? Was it to fall from heaven? It was to come from the people's pockets or from borrowing at high interest rates. I said then, and I repeat now, that it was a gimmick to buy votes. Not a single individual, outside the think-tank, had asked for such a move. I never heard any public representative in Cork, irrespective of party persuasion, ask for the abolition of car tax. The idea was ridiculous. A person in a mental home would scarcely think of it, but Fianna Fáil thought of it. It was one of the contributory factors that got them back in such strength at the last general election. As a result of gimmicks like this Fianna Fáil got back so strongly they were in each other's way. They were nearly torn asunder because of the strength they obtained as a result of the gimmicks they employed in the election campaign.

The sum of £5 per annum seemed to be a notional figure. Deputy Fitzpatrick read out the manifesto and I read the article relating to car tax. In the manifesto it was stated clearly that there would be no car tax and it implied there would not be any additional tax on petrol to offset the loss of the tax. The following year after Fianna Fáil came to office they said they would multiply the figure by two and made it £10. This year they multiplied by two again and now it is £20. I assume that next year they will multiply again — I do not know who will be doing the multiplication — and the £20 will become £40.

Perhaps the Taoiseach was not personally responsible for formulating policy then. I remember there were celebrations after the 1977 election and many acknowledged that the think-tank were the greatest. As the former Taoiseach said, they succeeded beyond his wildest dreams. I remember somebody told the former Taoiseach at the time that Fianna Fáil could get 77 seats on the strength of the manifesto but he thought that was a bit much. I do not know what would have happened to the poor man if he was told he would get 84 seats. Unfortunately it is a reflection on our people that they swallowed this kind of gimmickry. They rushed to the polling booths and voted for no car tax and no increase in petrol as set out in the manifesto.

As a Member of this House I will exercise my right to oppose this increase on the basis that it was a firm promise set down in writing by Fianna Fáil at the 1977 election. They promised that if they were returned to power there would not be any tax on cars of less than 16 h.p. I hope the Taoiseach will not tell me there is no car tax, that it is a registration fee. That seems to be the word they use now. Long ago we said we would tax our cars but now we are told we only pay a registration fee. I do not wish to delay the House but it is only right to point out these facts particularly when cars and travelling costs are so expensive. The Fianna Fáil manifesto is the bible. That was the bible on which the 1977 election was fought. Therefore, I ask the Taoiseach to uphold what was said in that bible and not to go ahead with this tax. I realise that is most unlikely but it is no harm for the public to realise that this is one of the gimmicks that went astray. As Burns said, "The best laid schemes of mice and men gang aft a-gley". Now the Taoiseach is coming to this House imposing a tax of £20 on cars. It is completely unfair and out of place in view of the solemn promises given by Fianna Fáil at the time of the election.

Mr. Harte

I will not delay the House but I wish to follow the same trend as Deputy Murphy. The increase of £10 will not put many of us in the workhouse and I would not take any exception to the amount were it not for the principle involved. In 1977 we had all the gimmicks Fianna Fáil could think of; nothing was too much so long as it collected votes. This was one of the things that got Fianna Fáil votes. It was not so much from the people who were taxing their cars but from those who were not taxing their cars because they could not afford to do so. Every time they took out their cars and saw a garda their heart was in their mouth but suddenly Fianna Fáil came along with the novel idea of removing car tax and they were, in the modern word, "legit". They were then decent citizens, they could take out their old banger and drive it along knowing they were not breaking the law. I am not sure that in the research carried out by the Fianna Fáil think-tank they did not look at this side of the question, that it was not in any way to alleviate the difficulties of tax on cars but to catch the people who were not taxing their cars. I wonder what trust they will have now in the present Government?

As I say, £10 will not rob us. For any person who is driving a car and can pay almost £2 a gallon for petrol — and it is approaching that figure — and anyone who burns 10 gallons of petrol a week, spending £20 per week — and most of us burn a lot more than that — a car registration fee of £20 is not so heavy a tax. However, it is the principle of the whole thing which is important.

By a trick, the Fianna Fáil Party were able to add this into their manifesto of 1977, to gather votes. The Taoiseach will look for money before the general election — and one would wonder when we are going to have a general election; the sooner the better — and will he be thinking, immediately after the general election if he is successful, of restoring the rates on houses? After all, there are only about two or three of the promises made in the manifesto still unbroken, so the whole thing might as well be scrapped.

The Taoiseach has told us regarding the tax on drink that people do not need to drink, they have a choice not to pay the tax and also that they can cut down on petrol. However, if they own a car, they will have to pay £10 extra. I add my voice to those of Deputies Fitzpatrick and Murphy in saying that this is a breach of faith on the part of the Fianna Fáil Government.

Might I conclude by saying that, when the Fianna Fáil Government came into office in 1977, I remember speaking to a few friends on the other side of the Border in a different context altogether and they said that if the Fianna Fáil Party could deliver all the things in their manifesto, a united Ireland would be no problem. If they could do without rates on houses and taxes on cars and produce all the other things promised, well that was the part of Ireland to be living in. It looked like that at the time, but these people must be very disillusioned now.

If this is the appreciation that the Taoiseach has of promises made in the last general election, then there is no appreciation of anything else. Promises are worthless.

The Taoiseach

As some of the Deputies have said, this is a relatively small item. However, it does bring in an extra £6 million which is very important from the point of view of the arithmetic of the budget. I fully agree with both Deputy Michael Pat Murphy and Deputy Patrick Harte that it will not in itself be any serious imposition on motorists. Let me deal now with the points which both Deputies made in regard to it. Had the tax not been removed from cars of up to 16 h.p., it is calculated that by now that tax would bring in £60 million. To put it another way, if there were a return to the normal old type tax, motorists in that category would be paying £60 million and at the moment the registration fee brings in only £12 million. It is, therefore, a bit of a misnomer to describe this registration fee as being a restoration of car tax for that category of vehicles.

Mr. Harte

In what way is it a misnomer?

The Taoiseach

At the very beginning, when tax on these cars was eliminated, the principle of the registration fee was adopted because cars still must be registered. It is absolutely essential, from the point of view of the administration of the road traffic legislation, that a car be registered. There must be some registration somewhere of every motor vehicle; otherwise one could not possibly enforce traffic legislation. The administration of the registration system is fairly expensive and the registration fee was introduced at the beginning, to pay the costs of administration of the registration scheme. I am not sure what the exact figures are, but I do not think that this £20 will do a great deal more than pay for the administration of the registration system. As I said, it is totally misleading and fallacious to suggest that the £12 million now to be paid by motorists in this category is in any way relevant or related to the £60 million which otherwise would be taken from them.

Mr. Harte

This is another election promise broken.

The Taoiseach

Had the car tax not been abolished ——

Mr. Harte

Does the Taoiseach not accept this?

An Ceann Comhairle

The Taoiseach without interruptions, please.

The Taoiseach

—— and were it still enforced——

Mr. Harte

That is not an interruption, it is only a question.

The Taoiseach

I find it very difficult, even with no interruptions, to speak clearly and succinctly and to formulate thoughts, but it really makes it impossible when Deputy Harte keeps interrupting.

Mr. Harte

I only asked one question.

The Taoiseach

What was that?

Mr. Harte

Does the Taoiseach not agree that this is another election promise broken?

The Taoiseach

No.

Mr. Harte

He does not.

The Taoiseach

My whole thesis is that it is not. The two things are completely different. One is a registration fee, broadly speaking, to pay the cost of the registration system, the other was a very specific and onerous tax on motor vehicles. The difference is as between £12 million and £60 million. I do not think that they can even be considered in the same context.