Financial Resolutions, 1981 (Resumed): - Financial Resolution No. 6: Excise — Motor Vehicles. – Dáil Éireann (22nd Dáil) – Tuesday, 21 Jul 1981

Financial Resolutions, 1981 (Resumed): - Financial Resolution No. 6: Excise — Motor Vehicles.

Mr. Bruton

I move:

(1) THAT the duty of excise imposed by paragraph 4 (1) of the Imposition of Duties (No. 236) (Excise Duties on Motor Vehicles, Televisions and Gramophone Records) Order, 1979 (S.I.No. 57 of 1979), on category A motor vehicles, within the meaning of paragraph 3 (a) of the said Order, shall be charged, levied and paid, as on and from the 22nd day of July, 1981, at the rate of an amount equal to 50 per cent. of the chargeable value, in lieu of the rate specified in section 71 of the Finance Act, 1980 (No. 14 of 1980).

(2) 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. Haughey

In view of the little time left to us we do not intend to discuss this matter in any detail this evening, but I should like to make some comments and to ask some questions. I would ask whether the Government have considered the employment implications of this duty. Financial Resolution No. 6 increases the duty on motor cars from 40 per cent to 50 per cent and I am sure I am right in thinking that this will be further increased by the VAT proposal. This is a major imposition on the motor car industry which will seriously affect it and must have very serious repercussions on employment.

When we were preparing the January budget this was one of the proposals put to us from the official side. It was a very ready way of raising a considerable amount of revenue but because of all its implications we turned it down and did not proceed with it in that budget. I am at a loss to see how the Government can be reconciled with this imposition on the motor vehicle industry at a time when they are allegedly concerned with the employment situation, leaving aside entirely for the moment all that this means from the point of view of those who rely on the motor car for their employment or other purposes. It will represent a very considerable imposition for a large section of the community and in the course of the Budget discussion I am certain that a number of people on this side of the House will wish to elaborate on all that is involved in this increase. We deplore this imposition, apart altogether from what it means in terms of taxation to the organisations concerned. We deplore it because of its economic implications and the very serious repercussions it will have on employment in this very sensitive industry. The motor industry has just come through very grave difficulties in a serious recession and this measure is a serious mistake by the Government. I am reinforced in this view when I recall that this was one of the measures we decided not to take in January when we were searching everywhere for some source of revenue to try to ensure that the budget deficit would be retained at a level of £515 million.

Time at our disposal is limited and we wish to talk in some detail on VAT and its implications. I assure the Government that the fact that we are not having a major discussion at this stage on this resolution does not mean that we are not seriously perturbed by what is proposed and by its implications, particularly on the employment situation.

Mr. Bruton

I share the concern of the Leader of the Opposition not to spend the time of the House unduly discussing one resolution when there are a number of others. The estimated effect of this duty on the sale of cars is a drop of less than 2 per cent in car sales. This is the calculation made by the Revenue Commissioners and I am sure Deputies opposite will recollect that the Revenue Commissioners are both scrupulous and reliable in their estimates of likely trends in consumption resulting from a tax change and hence the likely yield. I am not denying that the estimated drop in sales is significant but one must bear in mind that in January this year car sales reached an all-time record level. Since January there has been some fall off and the latest figures would not represent a record level. However, the House will see that the car market is relatively buoyant and that the effects of this measure will not be as severe as the Leader of the Opposition seems to anticipate.

The assembly industry here is not as large as in many other European countries. The greater part of most motor cars is imported and motor sales have an adverse effect on our balance of payments. To that extent while there will be disadvantages in any reduction in sales there will be advantages in the terms of relief on our balance of payments.

The main point about this measure is not that it can be justified in its entirety standing on its own but that it is justified because of the serious financial situation in which it had to be introduced. It is necessary for the revenue it will yield. We have not attempted to conceal that. It would be preferable if we did not have to put this extra cost on the people but it is necessary in present circumstances.

Dáil Éireann debate -
Tuesday, 21 Jul 1981