asked the Minister for Tourism and Transport whether the high cost of car rental in Ireland is a handicap to the development of tourism; the way in which these costs might be reduced; and if he will make a statement on the matter.
Ceisteanna — Questions. Oral Answers. - Car Rental Costs.
30.
The cost of car hire in Ireland is high relative to some European countries and the US. This is due primarily to our higher levels of insurance premia and excise duties.
The Courts Bill, 1986, which provides for the abolition of juries in personal injury cases, is currently before the House and should be enacted by the end of July. The Bill should result in reduced legal costs and greater consistency in awards which should ultimately be reflected in lower premia to the car hire sector and thus lower rental costs to the tourist. We must keep an eye on that to make sure it happens.
The current state of the public finances precludes a lowering of excise rates on cars for the time being.
However, lower access fares, lower inflation rates and improved competitiveness in the pricing of our accommodation product have helped to keep the overall cost of motoring holiday packages in Ireland competitive with other tourist destinations.
The Minister has acknowledged that car rental costs are high here in comparison to other countries. Given that access costs are coming down, particularly air fares to this country, would he not agree that there is an opportunity to encourage fly-drive holidays, which are popular elsewhere, and that one of the factors preventing that kind of development is car rental costs. If car rental costs were cheaper it would obviously enable people who arrive by air to visit the regions and would encourage the sale of other tourist products as well. This is a very important matter which deserves to be seriously addressed by the Minister. Apart from relying on the improvements that would be brought about by reducing insurance costs, are there not other measures which he could take to reduce the high cost of car rental?
I agree fully with the Deputy that the costs are very high. Before the application of VAT we are the most expensive of 12 counties — Canada, the US and ten European countries; after the application of VAT we are number three after France and Italy. I can tell the House that the Government have made a decision to give vouchers to US visitors worth $150 in this regard. The details of the scheme have not been worked out as yet, but as over 50 per cent of the people who rent cars when on holiday here are from the US, this should have an impact and should help in some way to offset the disadvantage that the US visitors have because of the weakening dollar.
I welcome the announcement the Minister has made in relation to vouchers. In relation to reducing the high car rental costs and the reliance which the Minister is putting on insurance costs to bring down VAT in line with other countries, has he considered a deferment of the payment of duty on cars — which is very substantial in this country — until the car companies are replacing their fleet? Would the Government not consider deferring the duty payment until such time as the cars are being sold?
The Deputy is expanding the scope of his question.
The duty would apply to the written down value of the car at that point in time.
I can inform the Deputy that that is the system that obtains in Denmark. The Government did consider it and rejected it.