Vol. 498 No. 4
268 Mr. C. Lenihan asked the Minister for Finance if his attention has been drawn to the views of the Society of the Irish Motor Industry in relation to the new vehicle registration tax regime; and his views on whether it will lead to a loss of tax revenues to the Exchequer. [27624/98]
271 Mr. C. Lenihan asked the Minister for Finance the potential tax yield he expects from his new budget regime covering vehicle registration tax. [27627/98]
I propose to take Questions Nos. 268 and 271 together.
I am aware of the views of the Society of the Irish Motor Industry in relation to the new vehicle registration tax rates and effective date. Representatives of the society met with senior officials of my Department on Thursday, 10 December 1998 and I was briefed on the discussions which took place. It has been made clear to SIMI that it is not proposed to make any changes to the budget day announcement.
As I said in the House on budget day, the restructuring of the VRT and the increase in the rates will bring in an estimated £43 million in extra revenue in a full year.
I believe that the overall package of measures announced in my budget, particularly in relation to income tax and corporation tax will help to stimulate growth in employment in all sectors, including that of the motor industry, which has been experiencing considerable growth in car sales.
I would like to inform the Deputy that the VRT figures for 1998 to date show that 57 per cent of new car sales are in the up to 1,400cc bracket. These sales are not affected by the budget announcement. A further 30 per cent of new car sales are in the 1,401 to 2,000cc bracket. These face a price rise of 3.3 per cent. Only 4 per cent are in the 2,001 + cc bracket which face a price rise up to 10.7 per cent. Most manufacturers have models below 1,600ccs, exceptions being manufacturers of luxury and sports car marques.
269 Mr. C. Lenihan asked the Minister for Finance his views on whether environmental factors were predominant in his decision to raise and vary vehicle registration tax; and the environmental objectives, if any, he hopes to achieve in this regard. [27625/98]
270 Mr. C. Lenihan asked the Minister for Finance the environmental targets, if any, he has set to be achieved by his decision to raise taxes on registered vehicles and introduce an additional tax band. [27626/98]
272 Mr. C. Lenihan asked the Minister for Finance if he will make a statement as to his reasons for introducing a new regime of vehicle registration tax. [27628/98]
273 Mr. C. Lenihan asked the Minister for Finance his reasons for varying and increasing the level of vehicle registration tax to be charged against car users. [27629/98]
I propose to answer Questions Nos. 269, 270, 272, and 273 together.
The changes which I announced in vehicle registration tax rates on motor cars will yield £43 million in extra revenue and will apply with effect from 1 January 1999. The changes will affect only those motor cars which are in excess of 1,400 ccs. The new structure will favour smaller cars by raising the VRT rate on larger cars. Cars of over 2,000 ccs, the market share of which to date in 1998 is in the region of 4 per cent, will pay the new highest rate of 30 per cent.
As I also said, it is appropriate to recoup revenue in this way from a sector experiencing record sales, which are being underpinned by the rapid economic growth that the country is experiencing. The increases in VRT will also yield a contribution from the motoring sector to meet the additional road-use and environmental damage arising from the unprecedented growth in private car numbers and usage.
The Deputy will also be aware that in moving the resolution on VRT on budget night the Taoiseach stated that the changes proposed were not solely intended as a revenue raising measure. He stated that they were a first response to the undoubted environmental impact of motoring in terms of air pollution, congestion and fuel consumption.
The overall package of measures announced in my budget, particularly in relation to income tax and corporation tax, will help to stimulate growth in employment in all sectors, including that of the motor industry, which has been experiencing considerable growth in car sales.
