Vol. 554 No. 5
418 Mr. Ring asked the Minister for Finance his plans to abolish or reduce VRT applying to vehicles coming here from other EU countries; when legislation allowing for free movement of vehicles throughout Europe will be enacted; and if he will make a statement on the matter. [16355/02]
I understand that the Deputy wishes to establish whether any changes will be enacted to the Irish VRT legislation as a result of a recent judgment of the European Court of Justice regarding the taxation of imported used cars. In this case the court held that the method of charging tax on used cars being imported into a particular member state was contrary to Article 95 of the Treaty. It did not find that the charging of such tax was in itself contrary to EU legislation.
In Ireland, VRT is not calculated on the same basis, and therefore, this ruling does not affect the Irish system. A discussion document was published by the European Commission in September 2002 regarding the taxation of passenger cars. As the Deputy will be aware, all EU Legislation regarding tax must be agreed by unanimity.
I have no plans to abolish VRT as it is a significant source of tax revenue to fund necessary public services. In Ireland VRT generates over €800 million per year. To replace this would require, for example, an increase of 2 percentage points in the standard rate of income tax.
419 Mr. Ring asked the Minister for Finance if, following the recent court ruling in Europe, the Government are going to abolish VRT and compensate the people they took money from for years, in view of the fact that it has been proven it was illegal to be collecting this within the EU. [16405/02]
The court ruling to which the Deputy refers was a judgment of the European Court of Justice regarding the taxation of imported used cars. In this case the court held that the method of charging tax on used cars being imported into a particular member state was contrary to Article 95 of the Treaty. It did not find that the charging of such tax was in itself contrary to EU legislation.
In Ireland, VRT is not calculated on the same basis, and therefore, this ruling does not affect the Irish system. The VRT scheme in Ireland is entirely legal and has been since its inception.
