Dáil Éireann debate -
Wednesday, 25 Jan 1995

Vol. 448 No. 1

Written Answers. - New Car Sales Revenue.

Ivor Callely

Question:

58 Mr. Callely asked the Minister for Finance the total Government revenue from new car sales in 1994; if his attention has been drawn to the fact that the increase in Government revenue was predicted in a positive submission to Government prior to the 1994 Budget; the estimated revenue from new car sales in 1995; and if he will make a statement on the matter. [1651/95]

Minister for Finance (Mr. Quinn)

In the run-up to the 1994 budget, the Society of the Irish Motor Industry sought the implementation of an extensive package of changes in the motoring taxation area aimed at boosting new car sales; the society's submission also contained revenue forecasts based on the adoption of its proposals in full. In the event, budgetary action was more restricted, namely, a reduction in the rates of Vehicle Registration Tax and an improvement in the capital allowances regime applicable to business cars.

As a result of the very strong recovery recorded in sales of new cars in 1994 — up some 25 per cent compared with 1993 — taxation receipts, at £361 million, were well ahead of the post-budget forecast. While the taxation changes certainly helped new car sales, the generally favourable economic conditions, particularly low interest rates, which prevailed throughout the year were far more significant factors in explaining the sales performance; indeed, it is now evident that the surge in new car sales had already begun before the budgetary changes were announced. Similarly, sales of other types of vehicles grew strongly in 1994 even though tax rates remained unchanged.

The continuation into 1995 of the favourable economic climate suggests that new car sales should remain strong this year and the relevant pre-budget revenue forecast of £391 million reflects this.