Dáil Éireann debate -
Tuesday, 25 Jun 2002

Vol. 553 No. 5

Written Answers. - Vehicle Registration Tax.

John Dennehy

Question:

184 Mr. Dennehy asked the Minister for Finance if his attention has been drawn to reports in the media that car prices may rise by up to 20% here as a result of an EU measure to harmonise the basic price of cars before VAT and vehicle registration tax; if he will give consideration to a review of the rate of VRT on cars, particularly those with smaller engine capacities; and if he will make a statement on the matter. [14654/02]

Minister for Finance (Mr. McCreevy)

I am aware of the EU proposal referred to above, which relates to the so-called block exemption dealing with the distribution, sales systems and after sale services of cars throughout Europe. This matter is one of competition policy and the lead Department is the Department of Enterprise, Trade and Employment. However, the matter is being monitored by officials of my Department.

While I will, as is normal, be considering VRT and all other taxes in the context of the forthcoming budget and Finance Bill, the Deputy will be aware that VRT is an important source of revenue for the Exchequer, especially given this Government's strategy of reducing other taxes such as income tax and corporation tax. If the suggestion is that the review should lead to a VRT reduction in rates and loss of revenue this would need to be borne in mind. Receipts from VRT in 2001 were in the region of €790 million. To recover this amount of money in alternative taxes would require, for example, a 36% litre excise duty increase in the price of petrol or an increase in the standard rate of income tax of over two percentage points.