Vol. 512 No. 6
29 Mr. McGrath asked the Minister for Finance if his attention has been drawn to recent documentation from the motor industry proposing a reduction in VRT for cars which comply with EU emissions directives while maintaining existing rates for cars which are non-compliant with these directives, would have a beneficial effect on the environment; and if he will make a statement on the matter. [26660/99]
For the Deputy's information, I received a pre-budget submission from the Society of the Irish Motor Industry and I met representatives of the SIMI who explained their proposals. One of their main proposals was a reduction of 2.5% in the rate of vehicle registration tax on cars that comply with the current EU emissions directives while maintaining the existing rates for cars that are non-compliant with these directives. For example, the rate of VRT for compliant cars up to 1400 cc would be 20% as opposed to 22.5% for non-compliant cars.
Since the 1970s, cars have been required to comply with various EU emissions standards, which are tightening all the time. New or brought in used cars, whether from inside or outside the Community, must comply with the standards pertaining to their year of manufacture. Further increases in standards are scheduled for next year and also for 2005.
All new cars must comply with these requirements. In effect, the SIMI proposed an across the board reduction of 2.5% in the VRT rates for all new cars, despite record sales this year. As used cars brought in are generally older and will not be required to meet the 2000 or the 2005 standards, the SIMI proposal would discriminate in favour of new cars.
The SIMI's proposal was given due consideration, but it was not considered favourably. While the SIMI presented the proposal as an environmental measure, if it had been accepted, the result would have been a reduction in VRT to achieve a standard for emissions that new cars must comply with in any event.
I have no doubt the Deputy is well aware that car sales continue to soar. The figure for total net registrations to end November 1999 is 170,431. That is an increase of 26,424 ahead of last year's full year total. As I said here on numerous occasions, VRT is a valuable source of funding for the Exchequer. Net receipts to end November 1999 are in the region of £593 million.
Will the Minister accept that because of the high rates of VRT we import a large number of cars? Will he tell us the number of cars imported this year and last year? We have one of the highest rates of VRT in the European Union. In terms of excise duties on petrol and VAT and tax on cars, I am sure he will accept our motorists are among the most highly taxed motorists in the Union. Will he consider increasing the bottom band of VRT to include all cars under 1.6 litres in the Finance Bill as a gesture towards reducing the financial burden on motorists? We will table an amendment to that effect to the Finance Bill.
I do not have those car import figures, but I am sure my officials will be able to send them to the Deputy. The Deputy made a sterling performance last year when I made changes in VRT during the budget and during Second, Committee and Report Stages of the subsequent Finance Bill. While the Deputy led in making the case for the Opposition many on my side—
The Minister should address the Chair. He would be less likely to get into trouble if he did that.
That would not stop me from getting into trouble, no more than it prevented Deputy O'Malley from getting into trouble on occasions in the past.
The Minister is quite safe with me. I treat Ministers with respect.
I thank the Deputy for his kind comments. I pointed out at that time that I did not believe the number of new car sales would suffer and I was proved correct. New car sales are at an all time high this year. The rebalancing measure I introduced did not affect the sale of new cars. Regarding the environmental impact I tried to ensure by way of that budgetary measure, figures will show the percentages changed in terms of the number of cars sold under 1,400 cc. etc. As an environmental measure, it had the desired effect. I do not want to enter into a debate with the Deputy on taxes on cars except to say that it costs a certain amount of money to run this country and taxes have be collected somewhere.
Will the Minister agree progress has been made in terms of the SIMI's approach to environmental concerns? Notwithstanding what he said in his reply, will he agree it is still possible and appropriate to discriminate in relation to the taxation of different cars exclusively based on the engine size in terms of the technology involved, fuel efficiency, use of the energy and emissions?
I welcome the move by the SIMI this year to concentrate more on the environmental impacts rather than merely lobbying the Minister for Finance to make certain changes in taxation. I welcome its change of emphasis in that regard. I accept there are other ways of calculating the environmental impact in this regard and I do not have a closed mind as to how this problem should be addressed. As I said in reply to Deputy Deenihan's question, the changes I made last year did not affect the sale of new cars, which continued to increase, but it had a rebalancing impact. Figures will show there was a change in the purchasing pattern, which has had an environmental impact.
(Carlow-Kilkenny): Will the Minister agree it is preferable if new cars that do not meet the regulations are imported because at least they are efficient but second hand cars have a much greater polluting impact on the environment and action should be taken to prevent their importation?
The regulations are tightening all the time. I am willing to consider further proposals that may be put forward by the SIMI or anybody else to alleviate the problem to which the Deputy referred. As I stated in my reply, the SIMI's proposals this year would have the effect of reducing the price of new cars more than anything else.
