Dáil Éireann debate -
Tuesday, 25 Nov 2003

Vol. 575 No. 3

Financial Resolutions 2003.

Minister for the Environment, Heritage and Local Government (Mr. Cullen)

I move the following Financial Resolution:

Excise Duties on Mechanically Propelled Vehicles.

(1) THAT in this Resolution–

‘Act of 1952' means the Finance (Excise Duties) (Vehicles) Act 1952 (No. 24 of 1952);

‘Act of 1992' means the Finance (No. 2) Act 1992 (No. 28 of 1992);

‘Act of 2003' means the Motor Vehicle (Duties and Licences) Act 2003 (No. 5 of 2003).

(2) That the Act of 1952 (as amended by section 4 of, and the Schedule to, the Act of 2003) shall, as respects licences under section 1 of that Act taken out for periods beginning on or after 1 January 2004, be amended in Part 1 of the Schedule to the Act of 1952 by substituting the following for paragraphs 1 to 6:

‘1. Vehicles of the following descriptions not exceeding 500 kilograms in weight unladen:

(a) bicycles (other than bicycles which are electrically propelled), or tricycles (other than tricycles neither constructed nor adapted for use nor used for the carriage of a passenger), of which the cylinder capacity of the engine–

(i) does not exceed 75 cubic centimetres €37

(ii) exceeds 75 cubic centimetres but does not exceed 200 cubic centimetres €51

(iii) exceeds 200 cubic centimetres €67

(b) bicycles or tricycles which are electrically propelled €31

(c) vehicles with three or more wheels neither constructed nor adapted for use nor used for the carriage of a driver or passenger €67.

2. (a) Vehicles (commonly known as dumpers) not exceeding 3 metres cubed in capacity, level loaded, designed and constructed for use on sites of construction works (including road construction and house and other building works) for the purpose of conveying concrete, rubble, earth or other like material where the person taking out the licence shows to the satisfaction of the licensing authority that the vehicle is used mainly on such sites, and on public roads only–

(i) for the purpose of proceeding to and from the site where it is to be used, and when so proceeding neither carries nor hauls any load other than such as is necessary for its propulsion or equipment, or

(ii) for the purpose of conveying concrete, rubble, earth or like material for a distance of not more than one kilometre to and from any such site €78

(b) Vehicles (commonly known as off-road dumpers) exceeding 3 metres cubed in capacity, level loaded, designed and constructed primarily for use on sites of construction works (including road construction and house and other building works) for the purpose of conveying concrete, rubble, earth or other like material and incapable by reason of their design and construction of exceeding a speed of 55 kilometres per hour on a level road under their own power and which are the subject of special permits under article 17 of the Road Traffic (Construction, Equipment and Use of Vehicles) Regulations, 1963 (S.I. No. 190 of 1963) €673

(c) Any vehicle (other than a vehicle constructed or adapted for use and used for the conveyance of a machine, workshop, contrivance or implement, by or in which goods being conveyed by such vehicle are processed or manufactured while the vehicle is in motion) constructed or adapted for use and used only for the conveyance of a machine, workshop, contrivance or implement (being a machine, workshop, contrivance or implement which is built in as part of the vehicle or otherwise permanently attached thereto) and no other load except articles used in connection with such machine, workshop, contrivance or implement or goods processed or manufactured therein including any vehicle (commonly known as a recovery vehicle) constructed or permanently adapted for the purposes of lifting, towing and transporting a disabled vehicle or for any one or more of those purposes €253

(d) Vehicles (commonly know as forklift trucks) designed and constructed for the purpose of loading and unloading goods where the person taking out the licence shows to the satisfaction of the licensing authority that the vehicle is used on public roads only

(i) for the purpose of proceeding to and from the site where it is to be used for loading and unloading, and when so proceeding neither carries nor hauls any load other than such as is necessary for its propulsion or equipment, or

(ii) as part of the process of loading or unloading, for the purpose of conveying goods for a distance of not more than one kilometre to and from the site where it is loading or unloading €78

3. (a) Vehicles constructed or adapted for the carriage of more than 8 persons which are owned by a youth or community organisation and which are used exclusively by the organisation solely for the purpose of conveying persons on journeys directly related to the activities of the organisation and which have seating capacity for–

(i) more than 8 persons but not more than 20 persons €117

(ii) more than 20 persons but not more than 40 persons €153

(iii) more than 40 persons but not more than 60 persons €307

(iv) more than 60 persons €307

(b) Vehicles (other than those referred to in subparagraph (c) of this paragraph) used as large public service vehicles within the meaning of the Road Traffic Act 1961, and having seating capacity for–

(i) more than 8 persons but not more than 20 persons €117

(ii) more than 20 persons but not more than 40 persons €153

(iii) more than 40 persons but not more than 60 persons €307

(iv) more than 60 persons €307

(c) Vehicles which are large public service vehicles within the meaning of the Road Traffic Act 1961, and which are used only for the carriage of children, or children and teachers, being carried to or from school or to or from school-related physical education activities, and are either licensed under Article 60 of the Road Traffic (Public Service Vehicles) Regulations, 1963 (S.I. No. 191 of 1963) as amended, or owned or operated by a statutory transport undertaking €72.

4. Vehicles of the following descriptions:

(a) vehicles designed, constructed and used for the purpose of trench digging or any kind of excavating or shovelling work which–

(i) are used on public roads only for that purpose or the purpose of proceeding to and from the place where they are to be used for that purpose, and

(ii) when so proceeding neither carry nor haul any load other than such as is necessary for their propulsion or equipment €78

(b) tractors (being tractors designed and constructed primarily for use otherwise than on roads and incapable by reason of their construction of exceeding a speed of 50 kilometres per hour on a level road under their own power) and agricultural engines, not being tractors or engines used for hauling on roads any objects except their own necessary gear, threshing appliances, farming implements or supplies of fuel or water required for the purposes of the vehicles or agricultural purposes €78

(c) tractors (being tractors designed and constructed primarily for use otherwise than on roads and incapable by reason of their construction of exceeding a speed of 50 kilometres per hour on a level road under their own power and not being tractors in respect of which a duty is chargeable at the rate specified in subparagraph (b) of this paragraph) which are used for haulage in connection with agriculture and for no other purpose €78

Where a tractor is fitted with a detachable platform, container or implement (being a platform, container or implement used primarily for farm work), goods or burden of any other description conveyed on or in the platform, container or implement shall be regarded for the purposes of this subparagraph as being hauled by the tractor,

(d) tractors of any other description € 253

(e) motor caravans, being vehicles which are shown to the satisfaction of the Revenue Commissioners to be designed, constructed or adapted to provide temporary living accommodation which has an interior height of not less than 1.8 metres when measured in such manner as may be approved by the Revenue Commissioners and, in respect of which vehicles, such design, construction or adaptation incorporates the following permanently fitted equipment–

(i) a sink unit,

(ii) cooking equipment of not less than a hob with 2 rings or such other cooking equipment as may be prescribed, and

(iii) any other equipment or fittings as may be prescribed €78

(f) vehicles which are kept and used exclusively on an offshore island to which there is no direct road or bridge access from the mainland €78.

5. Vehicles (including tricycles weighing more than 500 kilograms unladen) constructed or adapted for use and used for the conveyance of goods or burden of any other description in the course of trade or business (including agriculture and the performance by a local or public authority of its functions) and vehicles constructed or adapted for use and used for the conveyance of a machine, workshop, contrivance or implement by or in which goods being conveyed by such vehicles are processed or manufactured while the vehicles are in motion:

(a) being vehicles which are electrically propelled and which do not exceed 1,500 kilograms in weight unladen €80

(b) being vehicles which are not such electrically propelled vehicles as aforesaid and which have a weight unladen–

(i) not exceeding 3,000 kilograms €253

(ii) exceeding 3,000 kilograms but not exceeding 4,000 kilograms €320

(iii) exceeding 4,000 kilograms but not exceeding 5,000 kilograms €413

(iv) exceeding 5,000 kilograms but not exceeding 6,000 kilograms €572

(v) exceeding 6,000 kilograms but not exceeding 7,000 kilograms €774

(vi) exceeding 7,000 kilograms but not exceeding 8,000 kilograms €974

(vii) exceeding 8,000 kilograms but not exceeding 20,000 kilograms €974 plus €229 for each 1,000 kilograms or part thereof in excess of 8,000 kilograms

(viii) exceeding 20,000 kilograms €3,948

6. Vehicles other than those charged with duty under the foregoing provisions of this Part of this Schedule:

(a) any vehicle which is used as a hearse and for no other purpose €78

(b) any vehicle (excluding a taxi) which is used as a small public service vehicle within the meaning of the Road Traffic Act 1961, and for no other purpose €72

(c) any vehicle which is fitted with a taximeter and is lawfully used as a street service vehicle within the meaning of the Road Traffic Act 1961, and for purposes incidental to such use and for no other purpose €72

(d) other vehicles to which this paragraph applies and which have an engine capacity–

(i) not exceeding 1,000 cubic centimetres €151

(ii) exceeding 1,000 cubic centimetres but not exceeding 1,100 cubic centimetres €227

(iii) exceeding 1,100 cubic centimetres but not exceeding 1,200 cubic centimetres €251

(iv) exceeding 1,200 cubic centimetres but not exceeding 1,300 cubic centimetres €272

(v) exceeding 1,300 cubic centimetres but not exceeding 1,400 cubic centimetres €292

(vi) exceeding 1,400 cubic centimetres but not exceeding 1,500 cubic centimetres €313

(vii) exceeding 1,500 cubic centimetres but not exceeding 1,600 cubic centimetres €391

(viii) exceeding 1,600 cubic centimetres but not exceeding 1,700 cubic centimetres €414

(ix) exceeding 1,700 cubic centimetres but not exceeding 1,800 cubic centimetres €484

(x) exceeding 1,800 cubic centimetres but not exceeding 1,900 cubic centimetres €511

(xi) exceeding 1,900 cubic centimetres but not exceeding 2,000 cubic centimetres €539

(xii) exceeding 2,000 cubic centimetres but not exceeding 2,100 cubic centimetres €689

(xiii) exceeding 2,100 cubic centimetres but not exceeding 2,200 cubic centimetres €722

(xiv) exceeding 2,200 cubic centimetres but not exceeding 2,300 cubic centimetres €755

(xv) exceeding 2,300 cubic centimetres but not exceeding 2,400 cubic centimetres €786

(xvi) exceeding 2,400 cubic centimetres but not exceeding 2,500 cubic centimetres €821

(xvii) exceeding 2,500 cubic centimetres but not exceeding 2,600 cubic centimetres €961

(xviii) exceeding 2,600 cubic centimetres but not exceeding 2,700 cubic centimetres €999

(xix) exceeding 2,700 cubic centimetres but not exceeding 2,800 cubic centimetres €1,033

(xx) exceeding 2,800 cubic centimetres but not exceeding 2,900 cubic centimetres €1,071

(xxi) exceeding 2,900 cubic centimetres but not exceeding 3,000 cubic centimetres €1,109

(xxii) exceeding 3,000 cubic centimetres €1,343

(xxiii) electronically propelled €146.'.

(3) That the Act of 1952 shall, as respects licences under section 1 of that Act taken out for periods beginning on or after 1 January 2004, be amended by substituting the following for paragraph 5 of Part II of the Schedule (as amended by section 5 of the Act of 2003):

‘5. Where the applicant for a licence under section 1 of this Act satisfies the licensing authority that the vehicle in respect of which the licence is sought was constructed more than 30 years prior to the commencement of the period in respect of which the licence is sought the annual rate of duty shall, notwithstanding Part 1 of this Schedule, be–

(i) €19 where, apart from this paragraph, paragraph 1 of Part 1 of this Schedule would apply to the vehicle, and

(ii) €42 in respect of any other vehicle.'.

(4) That the Act of 1992 shall, as respects licences under subsection (3) of section 21 of that Act (as amended by section 6 of the Act of 2003) taken out for periods beginning on or after 1 January 2004, be amended by substituting the following for that subsection

‘(3) (a) There shall be charged, levied and paid on a trade licence a duty of excise of–

(i) in the case of a licence for exhibition only on a motorcycle, €45,

(ii) in the case of a licence for exhibition only on any other vehicle, €268.

(b) There shall be charged, levied and paid on a trade licence issued in place of a trade licence that has been lost, stolen or destroyed, a duty of excise of–

(i) in the case of a licence for exhibition only on a motorcycle €29,

(ii) in the case of a licence for exhibition only on any other vehicle, €65.'.

(5) It is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

This resolution provides for the amendment of the Finance (Excise Duties) (Vehicles) Act 1952 and the Finance (No. 2) Act 1992, as extended by the Motor Vehicle (Duties and Licenses) Act 2003, in respect of rates of motor tax and fees for trade licence plates. The resolution will provide for an increase of 5% in the rates of motor taxation for licences taken out with effect from 1 January 2004. The decision to propose an increase in motor tax rates was taken to raise funding for the local government fund and, specifically, to provide extra funding for non-national roads.

It is important to underline the fact that motor taxation is different to other taxes. Unlike other taxes, the proceeds from motor tax are not paid directly into the Exchequer. Instead, motor tax is paid directly into the local government fund and is ring-fenced entirely for local government. It cannot be used by the Exchequer for any other purpose. The motor tax paid into the fund is supplemented on an annual basis by a financial contribution from central government. The fund is used predominately to finance non-national roads and the general purpose needs of local authorities.

The general purpose grants paid from the fund are discretionary block grants and may be used by authorities for whatever purpose they consider necessary. In general, they are used to supplement other current income sources such as specific State grants, commercial rates and fees and charges for services. The income from all these sources is incorporated into local authorities' annual budgets to fund a wide range of functions central to the social and economic lives of local communities. These operations include maintenance and development of the non-national road network, management of the planning system, upkeep of social housing, operation and maintenance of public water and sewerage systems, waste management, care of the natural environment, running the fire services and community development.

The level of funding available to local authorities has increased substantially under the new arrangements introduced by the local government fund. The level of general purpose grant aid to local authorities has, since this Government took office in 1997, increased on average by 85%, representing an average annual increase of some 14% over the past six years. This, in anybody's language, represents a valuable contribution to local government.

The establishment of the local government fund and its substantial funding by motor tax receipts has created an important link between the amount of tax paid by motorists and the visible and concrete service they get for that tax in terms of better roads. It is anticipated that the proposed 5% increase in motor tax rates will raise some €34 million extra for the fund next year. Clearly, raising taxes is not a popular thing to do, but I believe that this increase is fully justified because the funding raised will be re-invested in our non-national road network.

The national development plan provided for investment of €2.43 billion in the non-national road network in 2000 to 2006. Of this, €1.08 billion is scheduled for the BMW region and €1.35 billion for the south-east region. The BMW region accounts for 40,500 km or 45% of the network. Given the predominantly rural character of the BMW region, non-national roads play a very important role in its economic and social life and its future prosperity.

The south-east region accounts for some 50,000 km or 55% of the non-national road network. While considerable economic growth has been achieved throughout the region over the last plan, this has been centred predominantly around the region's four main cities and the larger urban centres. This has led to capacity constraints in these areas while at the same time the more remote rural sub-regions have suffered from the negative effects of peripherality and isolation. Investment in non-national roads in this region from 2000 to 2006 will improve access to such locations, promote them as places in which to live, work or establish enterprises and improve the quality of life for resident communities.

The additional €34 million, which is the total estimated yield from the proposed increase in motor tax from 1 January 2004, will be spent on non-national roads in 2004. This local government fund money is in addition to the increased Exchequer funding for next year as set out in the recently published Book of Estimates. Exchequer funding in 2003 for non-national roads is almost €40 million. The Exchequer provision for 2004 is €48.8 million – an increase of around €8.8 million over the 2003 provision. This increase in the Exchequer provision will provide funding towards the increased costs of key strategic non-national road projects which will assist housing, commercial and industrial development. The additional funds being provided in 2004 will enable local authorities to progress work on these critically important schemes situated on the country's regional roads network. It is important to highlight that all of this funding is additional to, and will build on, the record levels of funding already being provided for non-national roads in 2003. I presume colleagues know I am referring to strategic roads in that package as opposed to the €400 million, which is the total non-national roads package.

The restoration programme accounts for about half of non-national road State grants each year. This programme was introduced in 1995 to restore regional and local roads in county council areas that had become deficient due to underinvestment. Since 1996, more than €1 billion has been allocated to county councils for improvement works under the ten-year restoration programme from 1996 to 2005. The result will be that around 32,000 km of non-national roads will have been improved by the end of this year. In addition, county councils have been allocated almost €320 million for maintenance works under the programme since 1996.

A pavement condition study carried out in 1996 identified that 47,000 km of the non-national road network were deficient at that time. The success of this Government in the area of non-national roads can be gauged by the fact that by the end of this year around 32,000 km or 68% of the deficient network will have been restored to good condition. This is real progress.

I recently announced the award of a contract to RPS-MCOS Limited, for the carrying out of the second ever pavement condition study of non-national roads and a review of pavement management systems. This new study is part of the Government's ongoing commitment to restoring the network of regional and county roads to a satisfactory condition over the ten-year period 1996 to 2005. The results of the study will determine the progress made since 1996 and also the extent of deficiencies remaining in the non-national road network since the last study was carried out. The results will also form an important part in prioritising investment in the non-national road network and ensuring value for money.

The review of pavement management systems is a first. The consultants are being asked to review existing systems and recommend a single one for use by local authorities on the non-national road network. This is intended to assist local authorities in prioritising schemes for inclusion in the restoration programme. Work on the study and review will commence immediately and is expected to be completed by mid-2004. The highest ever level of State funding for the non-national road network, which will be available in 2004, will allow for continued investment in non-national roads which is necessary for regional development. This achievement will only be made possible by raising extra funding through motor tax.

This Government is showing its commitment to local government and the non-national roads programme. I want to make it abundantly clear that this level of commitment must be matched at local level. I do not want this extra funding from central government to be used as a substitute for local authorities' own resources contribution. I expect local authorities to maintain their own resources contribution to non-national roads and to increase this next year in line, at least, with inflation. My Department will monitor this element of the programme next year. It is by central and local government working together that we will achieve our goal of a non-national road network that is second to none.

The new rates of motor tax set out in the financial resolution will apply to tax discs and trade licences taken out for periods beginning on or after 1 January 2004. A general increase of 5% is proposed. The new rates for all vehicles are set out in the printed financial resolution and rather than read them all out and take up the limited time we have available, I will highlight for the House a few details of the proposed changes for private cars and goods vehicles which make up 91% of the national fleet. The annual rate increase for the lowest engine size car under 1000cc is €7, an increase of 13 cent a week; for cars in the 1001cc to 1300cc range, the annual increase is between €11 and €13; and for cars in the 1301cc to 1400cc range, the additional annual increase is €14. Some 60% of the national car fleet is made up of cars under 1400cc. Therefore, the extra costs for most motorists will be between €7 and €14 a year, that is between 13 cent and 27 cent a week.

For the remaining cars, the increases will range from €15 for cars not exceeding 1500cc up to €64 for cars over 3001cc. Less than half of 1% of cars in the country are in the 3001cc plus category. For goods vehicles the effect of the 5% increase will vary depending on the size, in weight terms, of the vehicle. Some 85% of vehicles in this category are at the lowest level of charge, meaning they will pay an annual increase of €12 or 23 cent per week. A 5% increase is also proposed for trade licences, or trade plates, as they are known. These are the green registration plates used by motor traders on vehicles temporarily in their possession in lieu of taxing such vehicles. The increase for a pair of trade plates will be €13.

In discussing motor tax, it is important that I update the House on a major e-government project which is currently taking place. A new system which will allow people to tax their cars on-line over the Internet is being piloted in November in three counties – Clare, Galway and north Tipperary. Under this system, people will not have to travel to motor tax offices or to post their documents to the motor tax office. Rather, it will be possible for people to renew their tax at a time and a location that suits them. The on-line facility will be open for business 24 hours a day, seven days a week, 52 weeks a year. I am sure the House will agree that this is a major step forward in using technology to provide a quality service to customers of central and local government. The indications to date are that there is a good level of take-up on the pilot and that the system is sound. All going well, it is hoped that the service will be rolled out nationwide in early 2004.

In conclusion, I am concerned to ensure the viability and well-being of local government and in particular the non-national road programme. The level of increase in motor tax rates is not penal to individual motorists. However, the combined contribution of the increases on a vehicle fleet of about 1.8 million will provide a reasonable amount of additional funding which will facilitate the continued improvement in our non-national road network. It is for this reason that I am proposing to increase rates of motor tax. This financial resolution will cease on the enactment of the relevant Motor Vehicle (Duties and Licences) Bill, which will be presented to the House at the earliest possible date.

Mr. Allen

This debate takes place against a backdrop of one of the worst Books of Estimates for several years. It is bad because it cuts back services in almost every area, because it shows that we are no longer a low-tax economy but one with high stealth taxes, and because it is the product of two years of broken promises and six years of economic mismanagement. The proposed increase in excise duty is just one sorry story from this book of woe.

Let us take the time to go through the Government's long list of punitive increases this year. Development levies of between €6,000 and €30,000 are likely to raise €700 million from house buyers. The drugs payment scheme threshold has been raised by €8 to €78 per month, the third increase in a year. People with chronic illnesses will be priced out of the health market. Accident and emergency charges are going up to €45 from €40. It would be cheaper to buy one's own trolley. There has been a 15% increase in the cost of a private bed in a public hospital and a €5 increase in the cost of an overnight hospital stay to €45, with a cap of ten nights per year. Third level student registration fees have increased by €80 to €750. The fees for junior and leaving certificate exams go up €10 to €82 and €86, respectively. The fee for a standard ten-year passport is increasing from 1 March 2004 by almost a third, from €57 to €75. The cost of a three-year passport for infants aged up to three years is rising from €12 to €15, and a five-year passport for those aged between three and 18 years is going from €12 to €25. The emergency fee for passport applications processed outside office hours is up €37 to €100 for adults. The price of a ten-year passport for senior citizens bucks the trend, having been cut from €57 to €25.

Motor tax is up by 5%. The Government is determined to make life impossible for motorists. It provides the worst public transport in Europe and one of the worst rail services in the world, thereby forcing people into their cars, which are the most expensive in Europe. It under-invests in roads, and those roads that it improves it digs up shortly afterwards because of the lack of co-ordination between the statutory authorities. It increased motor tax by 12% last year and 5% this year. This is perhaps the only example of joined-up thinking in this Government – it is determined to make life miserable for motorists, and it has achieved its aims.

On this side of the House we are totally opposed to the increase. It is an insult to hard-pressed taxpayers, who have been hit time and again by stealth taxes on everything from houses to bin collection. The Government inherited a boom, cut taxes, squandered the boom and raised taxes, not on income, on millionaires or on the basis of ability to pay, but on everyone. This increase in excise is a disgrace. No doubt some in the Government will say that it is an environmental measure. It is nothing of the sort. The Government could do a great deal to help the environment, but the bottom line in all this is raising tax revenue. That is the only issue in which it is truly interested.

The Government says it is necessary to keep the roads programme on track. This relates to what the Minister said about ring-fencing for non-national roads, but the national development plan is seven years late and €9 billion over budget. A 5% increase will do very little. The increase is a simple, straightforward stealth tax – daylight robbery and a handbag snatch. However, Deputies should not take my word for it. They should listen to the Automobile Association, which called the news that motor tax is to increase by 5% deeply disappointing, saying that the notion that such an increase can be blamed on inflation is infuriating to motorists who are already paying an aggregate of €3.8 billion in taxes annually. It said that the Government has a primary duty to see that this money is well spent and that one cannot have a situation where inefficiencies and cost over-runs are tolerated simply because one can always go back once again to the motorist's pocket. As I stated, this measure will yield €29 million per year to the State. With that relatively small measure, it is clear what a mess the Government has got us into.

Mr. Gilmore

A 5% increase in motor taxation is not something about which I would normally get excited, were it not for the fact that it is part of a con being perpetrated by the Government. First, it is a con against taxpayers, who are being told repeatedly, particularly by the Minister for Finance, but echoed by other Ministers, that this is a low-tax economy. Yet at every opportunity the Government introduces and increases what are now popularly known as "stealth taxes", of which this is one. Today's increase of 5% in motor taxation is an action by the Government whereby it increases the level of taxation on the people while pretending that it is maintaining a low-tax economy.

Second, the increase is a con against the motorist. The Minister has said that the revenue raised will be dedicated to non-national roads. He said the same last year, and we all expected that some time in the early part of the new year we would see announcements made about increases in the grants to local authorities for such roads. The record shows that the money allocated by the Government for non-national roads in 2004 is €6 million less than the Estimates provided for in 2002. That is despite an increase of 12% in motor tax last year and a further increase of 5% for 2004.

The Government claims that revenue generated by the increase in motor tax is being dedicated to the improvement of non-national roads. The motorist has been told that the extra money to be paid to tax his or her car will ensure better roads on which to drive. The reality, however, is different. The 2002 Book of Estimates provided for over €54 million in grants to road authorities for non-national roads. That was a significant increase on the €39 million outturn for 2001, which was trumpeted by the Government in the run-up to the general election as a major increase in money to improve rural and urban roads. The then Minister for the Environment and Local Government, Deputy Dempsey, declared it "a record provision". He described non-national roads as "the backbone of rural transport" and went on to say that he was also committed to the improvement of urban roads.

Of course, that was before the general election. In every constituency in the country, Fianna Fáil candidates in particular could point to the increased provision in the Estimates when confronted by a constituent concerned about roads. However, like so many other pre-election commitments, the extra money for non-national roads disappeared very quickly after the general election. The amount of money spent in grants for non-national roads in 2002 turned out to be not the €54 million promised but just over €41 million, or 30% less than the sum estimated. This time last year, the Minister increased motor tax by 12% and assured the public that the increase would result in extra money for non-national roads. Presenting the motor tax motion to the Dáil on 12 December 2002, the Minister stated: "I took the decision to increase motor tax rates because it is necessary to protect and develop our non-national roads system, which is the bottom line." However, the real bottom line is that the amount in the Book of Estimates for 2004, which includes the proposed 5% increase, is €48 million. This is €6 million less than the amount estimated for two years ago, before there was any increase in motor taxation.

Mr. Cullen

For the Deputy's information, the €34 million and the 5% has nothing to do with the €48.8 million figure in the Book of Estimates – it is additional to that.

Mr. Gilmore

Does that mean the €48 million will then become €82 million?

Mr. Cullen

No, the €48.8 million is for strategic non-national roads.

Mr. Gilmore

That is the same amount the Minister told us about last year. This is smoke and mirrors. Last year, the Minister told the House that there would be increased money for non-national roads.

Mr. Cullen

There was considerably more money for them.

Mr. Gilmore

The provision in the Estimates was €39 million last year. As I understand it, the outturn for this year will be about the same and the Estimate for this year is €48 million. The Minister told the House earlier that the extra €34 million would be on top of that. When I asked him the simple mathematical question as to whether that meant it would be €82 million, it suddenly disappeared.

Mr. Cullen

We are talking about two completely different things. I have not yet made the non-national roads allocation. That is made when I publish the Estimates for local authorities with the local government fund. The actual spend from that fund on non-national roads is €400 million. If one examines those figures, one will see that last year's increase is correct, as I said it was, and when one looks at the local authority estimates for non-national roads when they are published in the next few weeks, one will see the figure is more than last year.

The ring-fenced figure in the Book of Estimates is the listed number of strategic roads, which has nothing to do with the 5% increase – that was an Exchequer-funded increase which we managed to get for the strategic roads, as opposed to the whole non-national roads programme which is running at €394 million. The full 5% will be in that figure, as distributed to the local authorities.

Mr. Gilmore

That so-called explanation does not in any way negate the point I am making, which is that the €54 million provided for in the 2002 Estimates was never allocated or spent. Some €39 million was actually spent. The figure of €54 million was put into the 2002 Estimates for the purposes of providing political comfort in constituencies where money for non-national roads was likely to be an issue in the general election. Precisely the same strategy is being teed up for the coming year.

The Minister commissioned a pavement study, about which we have been hearing for two years, and we are now told the report will be produced by mid-2004. In mid-2004, the study will be published in advance of the local elections in order that every Government candidate who comes across a disgruntled constituent concerned about the state of the roads will be told the study has been completed. I predict there will be another grandiose press conference announcement by the Minister pledging additional money and resources for non-national roads to underpin the notion. This happened in 2002 with the €54 million which never became a reality.

The other area to which the revenue from motor taxation is to be applied is the local government fund, which is used for the general purposes of local authorities. In last year's Estimates, the amount to be provided to local authorities under the local government fund was reduced. One would have expected that there might at least be a minimal increase in the amount being allocated this year but this has not happened. The figure for this year is €423 million and last year it was €421 million. That is not a real increase.

The significance of that, aside from their increased responsibilities, is that local authorities are now facing into annual estimates in the coming months and will have to find the money for benchmarking from their own resources. The Minister told the House some time ago that the total cost of benchmarking to local authorities for next year would be €140 million. No provision has been made for that in the Book of Estimates. Therefore, following the publication of the Book of Estimates and what the Minister has had to say, it is inevitable that local authorities will have to raise that money, either by increasing commercial rates or charges for services to the public.

Mr. Crowe

I wish to share time with Deputies Connolly and Eamon Ryan.

An Leas-Cheann Comhairle

Is that agreed? Agreed.

Mr. Crowe

Sinn Féin has time and again criticised the Government's habit of addressing revenue shortfalls through stealth taxes rather than through the general taxation system. The Government has shown a marked preference for stealth taxes which take no account of ability to pay and increasingly penalise those on lower incomes. Instead of taxing the wealthy, the Government taxes lower earners increasingly by stealth.

Sinn Féin strongly supports the concept of public transport and believes that proper funding must be a Government priority. We support measures which are designed to reduce private car usage, which is damaging to the environment and can cause huge traffic problems, particularly in the Dublin area. However, we are realistic enough to see that because the State has a severe deficiency of public transport, people are unwilling or unable to make the behavioural change to public transport. We have not yet reached the stage where the alternative of public transport is available widely enough to allow motorists to use it in place of private transport.

This problem is particularly acute in rural areas where public transport is practically non-existent. If a safe, reliable and reasonably-priced system of public transport was available, commuters would use it. However, that system does not exist and it looks increasingly less likely that the Government, with its policies of privatisation, will take the necessary measures to support this type of public transport. I have a problem with the proposed increase. Motorists, particularly the young, are crippled by high insurance and tax. The Government has done nothing to address this. We are constantly told the market will solve these problems but while we wait for that to happen, the price of insurance and tax continues to rise.

The hard-pressed motorists do not want more rising costs, hand-wringing, empty promises or excuses – they want action. However, the Government is reluctant to tackle the cosy cartel in the insurance industry. What we see instead is rising costs, like this motor taxation proposal which penalises the hard-pressed motorist who is without alternatives. I intend to vote against this proposal.

Mr. Eamon Ryan

The Green Party will also vote against this proposal. However, this is because we believe we should adjust the tax system to take into account the true costs of motoring which are huge. While motorists may feel they are paying more than their fair share of tax for their driving, the cost to our society in terms of accidents, environmental costs and the delays caused by excessive traffic mean we need to begin to reduce those costs.

Taxing driving is one way of encouraging better behaviour, but the way in which the Government proposes to do this is the wrong way. It is not as sophisticated as is possible. We need to move away from flat vehicle tax duties towards a more sophisticated system, through which we can target tax according to the weight and types of vehicles which people use. We also need to move towards a system whereby the more people drive, the more they pay. There is a variety of credible new measures, using satellite and other technology, which apply sophisticated taxes on car use. In this manner, one need not necessarily penalise people who need a car, such as those who live in remote rural locations. Instead, we can apply a tax to people who are using valuable road space which in turn has a high economic or environmental cost depending on the type of vehicle which is being used.

With this measure, the Government proposes to introduce another stealth tax increase which is regressive because people of all incomes pay the same. This small measure, 5% on the existing tax, is part of a range of similar tax increases the Government has introduced. We do not believe it is the sophisticated response that is necessary. While it is primarily seen as a revenue-raising exercise, we would like it to be far more.

Mr. Connolly

In the recently announced Estimates, the people have been hit with the full raft of totally disproportionate and unfair stealth taxes. Not least among these is a 5% increase in motor taxation, which the already punch drunk motorist has had to absorb. According to the motoring organisation the AA, in statistics announced last April, the long-suffering motorist who purchases a typical family car at €21,500 will have to pay €22,000 over ten years of driving. This includes VRT of €4,300 and VAT of €3,000, or 33% of the price of the car. Based on an annual mileage of 12,000, total road tax for this individual will amount to €3,490 and estimated petrol taxes for him or her will be approximately €10,000. There is then the ten year insurance levy of €140 and VAT on car servicing at €480. When added together, these bring the motorist's total tax contribution to €22,000. Added to the depreciation of the vehicle, it means that a car is a very expensive luxury.

The figures to which I refer are conservative. Nevertheless, the already fleeced motorist is ripe for further plucking in the eyes of the Minister for Finance. This comes on top of the 12% rise in motor tax at the same time last year and a 7% increase in VRT on vehicles over 1900 cc.

Some years ago, the heads of Europe's largest motoring organisations came together in Brussels to launch a new motorists' charter. The message was that the unfortunate motorists had had enough and that there should be a moratorium on new motoring and road tax increases. They might as well have remained idle if the actions of the Government since then are any guide. As taxes keep increasing, there has long been a breakdown of trust between motorists and the Government.

Europe's motorists pay in excess of €300 billion in taxes every year, but only one quarter of this is re-invested in transport and mobility. As bad as matters are internationally, the Government's record is much worse. Last year, it collected in excess of €3.8 billion in taxes for motorists and spent approximately €750 million, or a mere 18% of the total motor tax take, on roads and transportation.

The motorists' charter demanded a fair deal in other areas. It demanded fair taxes, fair investment, spending transport taxes on transport improvements, an investment in improvement in roads, driver safety and vehicle design, green incentives and the purchase of cleaner, safer cars through tax incentives. On the subject of green incentives, the Minister for Finance recently confirmed the introduction of a carbon tax by this time next year. This is despite vigorous opposition to the idea of such a tax from the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney. The latter is in character with the Janus-like approach of the Government, which manages to look both ways at the same time while politicians sit on the fence with their ears to the ground listening to the grass roots. If they listen hard enough to the grass roots, they would discover that people in rural areas depend on cars to a large extent because of a lack of public transport. They will be penalised further by the imposition of a carbon tax levied on petrol they are compelled to use. The fuel allowance of low income families will be further eroded by the levying of such a tax, which will also adversely affect the farming sector.

The car can no longer be regarded by the Minister for Finance as a luxury, but rather as an essential to economic empowerment, social inclusion and quality of life. People in rural areas have no option but to use cars because they do not have access to public transport or a Luas light rail system. This tax is being pushed on us and we have no choice in the matter.

Mr. Curran

The main purpose of the resolution is to increase motor tax rates broadly by approximately 5%. It is never easy to discuss an increase. However, it must be viewed in the overall context of where the money goes and the real cost to the motorist. When one considers the figures and what is delivered, an increase of 5% is modest. It has been referred to as a stealth tax, a suggestion with which I do not agree. Motor taxation has been with us for many years and it is part of drivers' annual costs; they appreciate it and know they are going to have to pay it. I do not believe that the level of increase is excessive.

The rate of tax we pay affords drivers the opportunity to drive and live within a given budget. It is not a flat rate per car, it is a rate based on the size of the car's engine and there are cost implications in that regard. It is worth considering the actual costs. In many cases, the increase of 5% will, depending on the size of the car, be €10 or €12 per annum and less if the car is small. It must be borne in mind that a sizeable proportion of the cars involved are less than 1400 cc or 1500 cc. I suggest that for private cars with engines of two litres and over, we should consider an upward sliding scale in terms of the rate of increase because there appears to be a substantial number of luxury cars on our roads.

We must consider the impact of this increase in motor taxation on business. I gave some consideration to this matter before coming into the House and I understand that for most business delivery vans and vehicles, the annual increase will be approximately €12 per annum. When one considers it in an overall context, including the question of competitiveness, I do not believe that the increase of 5% is excessive. The annual increase per individual motorist per annum, be it €7, €10, or €12, is anything but excessive.

This 5% increase will yield to the Exchequer approximately €34 million which will be invested in the local government fund. Motorists are constantly making demands for upgraded, improved and safer motoring facilities. In the greater Dublin area, where non-national roads are not the issue, there has been a substantial investment in road infrastructure. In the part of the city in which I live, which has grown rapidly in recent years, road improvements have tried to keep pace with the increasing number of cars and have included the M50 toll bridge, the slip-roads on and off the M50, the flyover out of Clondalkin into the new Luas light rail depot and the widening of the Naas dual carriageway from Rathcoole to be continued further south. There is a continuous programme to provide the facilities motorists are demanding.

I support the resolution. I disagree with previous speakers who referred to the increase of 5% as a stealth tax. This is a modest and fair increase and I do not believe it will affect competitiveness in the area of business.

Mr. Crawford

The Minister referred to motor tax rates and the previous speaker stated that the motor taxation system has been in place for a long time. I am old enough to recall when motor tax was done away with. I refer to 1974, when people were asked to pay a car registration fee of £5. This amount was subsequently increased on many occasions and we have now returned to a system of motor taxation.

It is lovely to hear Members say that a 5% increase does not matter and it does not count. The Minister even broke the increase down to euro per day, which sounds great. The Ceann Comhairle and I are from the same constituency and businesses there must compete against those of our friends across the Border. Another 40 jobs were lost in Kingscourt and the Minister for Enterprise, Trade and Employment did little about that. She stated on television on Sunday night that she was thinking of changing portfolios, and that would not be bad, given our experience in the Border region.

Mr. Gilmore

The sooner, the better.

Mr. Crawford

We must compete against our counterparts in Northern Ireland. I checked the current motor tax with my local tax office earlier and the tax on a 2.5 litre car is €782, the tax on a 2 litre is €513 while the tax on a 1.6 litre is €372. It does not matter what size one's car is in Northern Ireland because motor tax is charged at a flat rate of £160 or approximately €230 per year. Insurance costs are also much higher in the Republic than in the North, particularly for young motorists. In addition, VRT must be paid here. We must be able to compete and my constituents have a difficulty in this area.

It is more difficult in rural areas. The Minister of State is from Donegal and those who travel between Donegal and Dublin on a regular basis will use a larger car than a Mini Minor. There is no rail service to Counties Donegal, Cavan and Monaghan and, therefore, no alternative means of transport for passengers and freight. Naturally, people from these counties use larger cars, particularly those working in the agriculture industry who need such cars to tow trailers and so on. This is yet another tax on top of many others and it is a major issue. It creates a non-competitive environment for those who live in the Border area. It would be grand if, as the Minister stated, we got everything back in the form of good roads but the reality is different.

The current ten year programme commenced in 1995 and it is good that the Minister gave the rainbow Government the credit for it. However, a few years ago County Monaghan did well in terms of the number of miles of road dealt with under the available budget. Budgets have been increased but costs have also increased at a greater rate. A lower number of miles of road is being dealt with compared with the past. Motor tax is a charge that will, in addition to development levies and so on, make it much more difficult for those living in rural areas. The Government has not financed local authorities in terms of the work they need to do or benchmarking, and that is an indication of failure.

Mr. O'Connor

I will leave it to my colleague, Deputy Grealish, to defend the Minister for Enterprise, Trade and Employment. I support the motion. The Minister stated that the establishment of the local government fund and its substantial funding through motor tax receipts has created an important link between the tax paid by motorists and the visible and concrete service they get in return in terms of better roads. It is anticipated that the proposed 5% increase in motor tax rates will raise €34 million extra for the fund. It is not popular to raise taxes but the increase is fully justified because the funding generated will be invested in our non-national road network.

We are all entitled to make political points and many colleagues have referred to their constituencies. Deputy Crawford referred to the roads in Counties Cavan and Monaghan and I will refer to Tallaght in Dublin South-West.

Mr. Allen

Why not?

Mr. O'Connor

I am always happy to talk about Tallaght and the great progress that has been made there. Part of my role and that of my colleagues is to continue to stress to Government the needs of our constituencies. Tallaght has come on enormously over the past 14 years and there has been direct investment in road infrastructure. My colleague, Deputy Curran, listed a number of developments, including the M50, which pass through both Clondalkin and Tallaght. The road infrastructure has improved enormously. I am not from Tallaght, although I have been living there for the past 33 years and I know a little about what it was like when I arrived there.

Mr. Allen

Where is the Deputy from?

Mr. O'Connor

I am from the inner city. I was born in Holles Street and lived in Crumlin. When I moved to Tallaght, there was a lack of infrastructure and facilities but this has been addressed and Tallaght is a great place. While the road infrastructure has improved enormously, there are still gaps. For example, the Tallaght bypass, which is a superb road, requires further investment and it needs to be extended to Brittas and Wicklow.

Ms Burton

What about the Red Cow roundabout?

Mr. O'Connor

It is not in Dublin South-West. However, if we debate the works at the roundabout sometime, the Deputy will discover that our views are compatible. I have to sit in traffic at the roundabout as often as anyone else and I have strong views about what should be done. I refer to positive developments in Tallaght. The Tallaght bypass needs to be extended so that the nice people of Wicklow can get to Tallaght much more quickly.

I served on Dublin County Council, together with Deputies Burton and Gilmore, from 1991 onwards and until recently I was a member of South Dublin County Council. I often raised the need for investment in minor roads. For example, a minor road outside Saggart in my constituency has been closed. The local authority should be able to seek funding to do the necessary work on that road.

The Minister referred to pavement repairs. I actively promoted the repair not only of roads but also footpaths when I served on South Dublin County Council. I am glad that over recent years, through prudent budget management by the controlling group, such work has been done. This work is important. We all have different views and I am happy to entertain the views of others. The financial resolution is reasonable and it is important that the money should be used properly and allocated to local authorities to get the necessary work done because that is what our communities want.

Ms Burton

The vote later will be the first instalment in a series on budget 2004. Given what the Government did this year, it is appropriate that next year's budget proposals are marked by yet another increase in direct taxation. This increase in motor tax is a stealth tax for many members of the public.

The Government likes to focus, as its great achievement, on dropping direct income tax rates, particularly the reduction in the higher rate to 42%. However, it does not tell the electorate about the continuous stream of increases introduced last year, the previous year and this year, of which this is the first to be voted on. This increased charge for this year is not alone. There is provision for increases in registration fees, hospital charges and the contribution which must be paid before one can get a drugs refund. A series of stealth charges are already provided for at a time when the Minister for Finance, Deputy McCreevy, and the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney, continue to suggest that this is a low tax Government.

It is certainly a low tax rate Government in terms of the headline rates of income tax. However, when those who people the back pages of the Minister for Finance's budget illustrations, such as Duncan and Mary, add up the additional charges imposed by the Government this year and what they will be charged next year, the burden on them, including taxation and charges, is considerably increased. While we will not know the content of the budget until next Wednesday, the biggest stealth tax of all was the failure by the Minister to increase tax credits and allowances.

When considering this increase in motor taxation, it should be borne in mind that we have a very dispersed style of development in this country, a situation which many Members from the Fianna Fáil benches are at pains to praise. However, the consequence of such dispersal across the country, but particularly in Leinster, which is undergoing the greatest development, is that many families must have not just one, but two cars. Those are also the families paying mortgages as well as trying to pay the equivalent of another mortgage in respect of child care.

Where people live in such a dispersed pattern, there is little or no public transport. For many people in city suburban areas, including my constituency, public transport is also extremely limited. A recent survey showed that it takes 40 minutes to travel to the city centre by train from parts of Dublin West, while the equivalent car journey takes only about 35 minutes on a good day. Under the patterns of development which have been set up, families which need to have two cars will pay the cost inflicted by the Government in the form of these extra charges.

With regard to the pavement survey to which Deputy O'Connor referred in the context of better local government and public service reform, we now have highly paid officials at the top echelons of Departments and local authorities. Why do we need yet another costly consultancy exercise in connection with a matter such as pavements? This is where taxpayers' money is going. The top level officials to whom we are paying large salaries should be capable of producing this work, rather than out-sourcing it to expensive consultants and having an expensive launch, complete with photo opportunities, for Ministers. It is a waste of taxpayers' money. This is where the real debate about benchmarking should take place. It is easily done.

Mr. Grealish

I welcome the opportunity to speak on this important matter. On the facts of the situation, an extra 25 cent a week is not a heavy demand to place on motorists in this country. That is what the average motorist will have to pay in January when the motor tax rate is raised. Some 60% of the national car fleet consists of 1.4 litre engines or less and, on that basis, the extra cost will be between 13 and 27 cent per week. For motorists with 3 litre cars, the increase will represent approximately an extra €1 a week, which I do not believe they will begrudge.

The problem with Opposition Deputies is that they have fallen into the habit of opposing everything. Every increase in charges or levies is met with a wringing of hands and indignant howls of protest. They want better roads and better public transport, but without any sensible or sane proposals as to who is to foot the bill. They constantly shout about increases, but how would they propose to run the country if they were in Government?

Ms Burton

We want value for money.

An Ceann Comhairle

Deputy Grealish, without interruption, please.

Mr. Grealish

In this country, we have the most ambitious road programme anywhere in Europe, but this does not come free of cost. The Government cannot realistically be expected to wave a magic wand and produce the money from thin air. Some form of levy must be imposed. Those who use our roads must contribute, as they do, through motor taxation. The increase in motor tax from January is expected to raise an extra €34 million. The Minister for the Environment, Heritage and Local Government has made a commitment that every cent raised will be ploughed back into non-national roads.

Motor taxation is paid directly into the local government fund, which is ring-fenced for the specific purpose of local government and cannot be used for other purposes. That is welcome. It is a fair system whereby those who use the roads on a daily basis are asked to contribute to their maintenance. We cannot overhaul, improve and extend our network of non-national roads without this increase. I recall the pothole election candidates who were a significant feature ten, 15 or 20 years ago. As a Deputy representing a largely rural constituency, Galway West, I can appreciate, at first hand, the huge investment that has been made in recent years in our road network and the benefits this is having.

Only a few short years ago, one could scarcely drive from Galway to Clifden without being at risk of disappearing down a pothole. Roads were poorly maintained and badly in need of repair, resurfacing, extending and improvement. In some instances, they endangered driver safety and accidents and fatalities occurred. That is becoming a thing of the past. This year alone, €434 million will be spent on non-national roads. That translates to €4,346 for every kilometre of non-national road in the country. That type of improvement and investment must come with a price. I believe a 5% increase in motor tax is justifiable.

Following publication of the Estimates, I met with a number of constituents to discuss the issues and gauge their reaction. There were no howls of protest at the motor tax increase. There was no outcry or attacks on the Government. That behaviour seems confined solely within this House.

Mr. Gilmore

Perhaps the Deputy is mixing in the wrong circles.

Mr. Grealish

The people of this country are realistic and pragmatic. They want to see an end to the pothole era, so that they can get from A to B quicker and more safely, without damage to their cars as a result of driving on poorly maintained roads. They recognise that there must be a price to pay and they do not consider a 5% increase as unfair or outlandish. They recognise that one cannot continue to call for better services and greater facilities, but then keep one's hand behind one's back when it comes to payment.

The average motorist, when asked about costs, will point first to insurance premiums. I am glad that cost is now being tackled. I compliment the Tánaiste and Minister for Enterprise, Trade and Employment, the Minister for Justice, Equality and Law Reform and the Minister for Transport on their work to bring down insurance costs. A range of measures, including the penalty points system, is starting to pay dividends and insurance companies are starting to lower their premiums, some by as much as 15%.

Insurance is the real cost for motorists, not motor tax. Those Deputies who oppose the 5% increase in motor tax now will be first into this House in the new year, putting down questions as to when a road in their constituency will be maintained or improved. I, too, want to see the roads in my constituency maintained and improved but at least I had the courage today to put my hand up and acknowledge that the money must come from somewhere and motorists must pay a share.

Caoimhghín Ó Caoláin

I wish to share my time with Deputy Boyle.

An Ceann Comhairle

That is agreed.

Caoimhghín Ó Caoláin

I oppose the proposition before us.

Mr. Grealish

What is new?

Caoimhghín Ó Caoláin

What is new in terms of the Progressive Democrats' position on further taxing those who can least afford it? There should be no increases in this regard. Respect should be at least given to a Deputy to make his or her contribution without interruption. We do not have the luxury of having five minutes to speak. There should be no increases, irrespective of how great or small, in motor tax. The reality is that motorists are already being fleeced at every turn. We have value added tax on cars, vehicle registration tax, excise duties on petrol and diesel and the ever spiralling cost of car insurance. Motorists are again being used as an easy target to secure further revenue by the Exchequer. That is completely unacceptable. This is another form of stealth taxes, make no mistake about it.

Pledges were made by the Government and earlier speakers in terms of road improvement investment, but there has been a kinked investment record by the Government vis-à-visroad improvements over the past six years. The Border, midland and western region has not seen investment equal to that in the east and south of this island. That is a fact. Motorists in the Border, midland and western region are being continually penalised, yet they are being asked to contribute exactly the same as those in other regions.

I refer to young drivers in particular. Young people are in despair in many of these counties, not least in my constituency of Cavan-Monaghan. They are in despair because they are clearly in a situation where they have the least access and opportunity to take up third level education. They are invariably dependent on private car access to employment because I repeat we have no public transport system in these counties. That is the reality. That dependence of people of all ages, particularly young people, to access employment through the use of private car opportunities means that this is a further tax on work. That is what this tax boils down to. It is completely unacceptable. It takes no account of ability to pay. There is a bounden duty on Government to decide not to press ahead with this proposition. I oppose the motion and will vote accordingly.

Mr. Boyle

The spurious use of the establishment of a local government fund as a means of better funding local authorities to justify the raising of this motor tax must be opposed. On several grounds the local government fund is to be increased only by revenue generated by this measure. The Government has chosen not to directly fund local government by any other means in the Estimates. This is the one method by which local authorities are being asked to meet their ever increasing costs, especially in terms of benchmarking payments. In view of this, this increase will be accompanied by large increases in commercial rates and in service charges in local authority areas.

The local government fund is spurious in a number of respects. It does not take account of the number of motor vehicles in each area, whether there is greater car usage as between urban and rural areas in a local authority area, or the extent to which public transport is available in some areas and non-existent in others.

Motor tax must be questioned in terms of its efficiency. The cost of the motor car must be properly accounted for. However, this is a regressive tax in that a widow who makes one or two journeys a week is taxed in the same way as a person who chooses to use his or her car on a regular basis day in day out for several hours a day. If the Government was serious in targeting motor taxation as an environmental tax, it would consider how we could raise such tax revenue on a usage basis. In that context, rural communities would have to be considered differently because, as speakers pointed out, there is no public transport infrastructure in place in such communities.

Mr. Cullen

That aspect can be dealt with by increasing the price of petrol.

Mr. Boyle

However, the choice to which I referred should be given to people in urban areas. The fact that we have a tax that only raises revenue on the basis of whether one has a car is not an environmental tax. Given the damage commercial vehicles cause to the fabric of our road network by their weight and size, their owners do not pay proportionately more motor tax. If the Minister was serious about having an equitable car tax, he would not put in place this measure.

An Ceann Comhairle

The Deputy's time is concluded.

Mr. Boyle

Deputy Cowley has come into the House and I was going to offer him a minute of my time.

An Ceann Comhairle

The Deputy has gone over the time he was allocated. Two minutes remain before I must call the Minister. Deputy Cowley is welcome to that time allocation.

Dr. Cowley

I thank the Ceann Comhairle for this opportunity to speak. People in the west experience great difficulty in regard to the condition of the roads there. The carve up of the BMW region for funding has always been disproportionate. The area that suffers the most is the west because it does not have the necessary infrastructure to allow it to attract the type of industry required to ensure that the people can stay there. Half of graduates from the west have to go to Dublin to get their first job.

There was an increase in motor tax in the previous budget and a further increase is now proposed. Such a tax is disproportionate in that people in rural areas, in particular, depend on their cars, which are a necessity. If a tax is constantly increasing it is not equitable. The position is different in Dublin or other cities where public transport is available but a similar facility is not available to people in the countryside. Therefore, this tax is inequitable. I appreciate it is ring-fenced and the revenue accruing from it will go towards the maintenance of secondary roads which is important. However, if people from the west thought that such revenue would be used for road improvement works in the west, they would have more confidence in this measure. Given that there has seen such neglect of the west over the years, I hope that this position will improve.

There have been many price increases. While we do not have a high income tax rate, indirect taxation has given the lie to the fact that this is supposed to be a low tax economy. Overall, we pay many taxes and people are finding it increasingly difficult to manage. I have a problem with this increase.

An Ceann Comhairle

We will now have questions for which the time allocated will not exceed ten minutes. Has Deputy Allen a question?

Mr. Allen

I do not have a question. I did not realise there was time allocated for questions, I thought there would be a response from the Minister.

Mr. Gilmore

I have two questions for the Minister. The first relates to what is grandiosely entitled the pavement condition study which is to be carried out. A pavement condition study basically involves finding out what roads need to be repaired or resurfaced. The Ceann Comhairle or I could do that. We could go around and check where a road needs to be resurfaced.

Given that engineering staff are attached to every local authority and they ought to be able to recognise a pothole or a damaged road, why is it necessary to engage consultants to carry out this study? What will the consultants be paid for this work? What skills will consultants bring to this task that the average county engineer could not?

At a press conference held by the Minister following the publication of the Estimates on 13 November, he told the assembled press that €38 million was being provided in the Estimates for the local government fund towards the cost of benchmarking in local authorities. I have searched the Estimates but I cannot see sight of that €38 million provision. Will the Minister identify in the Estimates from where that €38 million comes and if any of it will come from revenue raised by motor taxation?

Mr. Cullen

On the question of the pavement study, we want to know the current position. While the consultants engaged will talk to the local authority officials, I decided not to directly approach each local authority because I wanted the study to be as objective as possible. I also want to put in place one management system for the country as local authorities seem to be doing that in different ways. I am not sure of the facts here.

Mr. Gilmore

What roads need to be repaired?

Mr. Cullen

We have made much progress over recent years and I want to continue to ensure that we are getting such results. The indications are positive and I want to see more maximum results and a more uniformed and targeted approach, depending on the various parts of the country.

The cost of the study, Deputy Gilmore, came to over €730,000. In the context of the overall amount of money that we are spending on the road network, it is good value for money. If the Deputy checks last year's figure for the total local government fund in the Book of Estimates, he will see an increase of €38 million. That does not include the 5% motor tax increase that comes to €34 million. Overall, there is an increase on last year's fund of €72 million.

There is some confusion between two different aspects of the road fund. To clarify, there is a specific EU co-financed fund for non-national, strategic roads, identified for housing needs. That is the figure of €40 million from last year which I increased to €48.8 million this year. The total amount on roads last year in the local government fund was €394 million. This year, with the €34 million increase, it will stand at €428 million.

Mr. Allen

I am surprised that a group of consultants are commissioned to examine our footpaths.

Mr. Cullen

What is termed a "pavement study" actually refers to all the roads.

Mr. Allen

Even at that, one would expect each local authority to be capable of doing such a study. This could have been part of the conditions for benchmarking for local authorities. The Minister introduced a tax for the disposal of cars to comply with the EU end-of-life vehicle directive. Why is there a hold-up in the implementation of this directive? The tax was imposed on the motorist through the price of a car, yet the directive has never been implemented.

Mr. Cullen

On the Deputy's point on the pavement study, the last one was commissioned for the first time by the rainbow Government. It was a valuable contribution to the non-national road network. I commended it at the time and it is still a valuable instrument. I hope we will be able to build on that good work done by the then Minister. Deputy Allen was then Minister of State at the Department and I understand he had direct responsibility when the report was commissioned. I am only emulating some of the good things that were done when they were in government.

There is no tax imposed on the disposal of end-of-life vehicles. The Deputy is correct that there has been no finality on this issue. However, I am trying to bring many different groups together and to be fair to all concerned. This is difficult as people see this issue in different ways. The directive is also being implemented in different ways in different countries with differing interpretations. The bottom line is that the directive comes into force in a few years' time, one way or the other. I want to introduce a compulsory stage and we have made much progress on its implementation. We are at the end game and I hope we will get agreement on it soon.

Mr. Allen

The directive was to be implemented in 2001.

Mr. Boyle

If this Financial Resolution is approved, will the Minister for the Environment, Heritage and Local Government examine ways in which the local government fund can be reallocated to counteract the bias that exists against urban authorities? Urban authorities must deal with footpaths for pedestrians, traffic crossings, traffic and street lights, while the more radical ones have cycle paths and special bus lane facilities. Are there proposals to ensure such a like-with-like system does not remain and the fund will be reallocated in a different way to reflect these biases?

Caoimhghín Ó Caoláin

How does the Minister for the Environment, Heritage and Local Government propose to address the serious imbalance in road development, maintenance and investment between the BMW region and the eastern seaboard? Are there other surprises that the Government has for motorists in the immediate offing? Can we anticipate increases in excise duties on petrol and diesel in the forthcoming budget?

Mr. Gilmore

The figure of €38 million is the comparison between the 2002 and 2003 total expenditure in the local government fund. If the entire €38 million is going towards the general purposes payments of local authorities, is it correct that there is no additional money for non-national roads?

Mr. Cullen

I am glad the Deputy has spotted that, as it is a good question. However, the Deputy has put it in reverse order. If one checks the Estimates, the actual €38 million will go to the general purpose side because that figure is not shown in the Estimates. The motor tax increase will go specifically to the non-national roads element of the local government fund.

Mr. Boyle

Why is the figure still there?

Mr. Cullen

The figure is €38 million, which is a bigger increase. In the Estimates it states between 2% and 3%, but the actual increase will be 6% for the general purpose element of the local government fund.

There is an equalisation basis on how we distribute these funds, with the block grants. It must be remembered that some of the urban authorities have far greater resources available to them in terms of rates-based revenue and so forth. The equalisation of a block grant system works in a fair way in achieving that balance. It might not be perfect, but there is a strong basis for doing it.

Deputy Ó Caoláin can speculate about the forthcoming budget but I have no comment to make on it.

Question put: "That Financial Resolution No. 15 be agreed to."

Tá

Ahern, Bertie.Ahern, Michael.Ahern, Noel.Andrews, Barry.Ardagh, Seán.Aylward, Liam.Brady, Johnny.Brady, Martin.Brennan, Seamus.Browne, John.Callanan, Joe.Callely, Ivor.Carey, Pat.Carty, John.Cassidy, Donie.Collins, Michael.Cooper-Flynn, Beverley.Coughlan, Mary.Cregan, John.Cullen, Martin.Curran, John.Davern, Noel.Dempsey, Tony.Dennehy, John.Devins, Jimmy.Ellis, John.Finneran, Michael.Fitzpatrick, Dermot.Fleming, Seán.Gallagher, Pat The Cope.Glennon, Jim.Grealish, Noel.Hanafin, Mary.Haughey, Seán.Hoctor, Máire.Jacob, Joe.Keaveney, Cecilia.

Kelleher, Billy.Kelly, Peter.Killeen, Tony.Kirk, Seamus.Kitt, Tom.Lenihan, Brian.McDowell, Michael.McEllistrim, Thomas.McGuinness, John.Martin, Micheál.Moloney, John.Moynihan, Donal.Moynihan, Michael.Mulcahy, Michael.Nolan, M.J.Ó Cuív, Éamon.Ó Fearghaíl, Seán.O'Connor, Charlie.O'Dea, Willie.O'Donnell, Liz.O'Flynn, Noel.O'Keeffe, Batt.O'Keeffe, Ned.O'Malley, Fiona.O'Malley, Tim.Parlon, Tom.Power, Seán.Roche, Dick.Sexton, Mae.Smith, Brendan.Smith, Michael.Treacy, Noel.Wallace, Dan.Wilkinson, Ollie.Woods, Michael.Wright, G.V.

Níl

Allen, Bernard.Boyle, Dan.Broughan, Thomas P.Bruton, John.Burton, Joan.Connaughton, Paul.Connolly, Paudge.Costello, Joe.Coveney, Simon.Cowley, Jerry.Crawford, Seymour.Crowe, Seán.Deenihan, Jimmy.Durkan, Bernard J.English, Damien.Enright, Olwyn.Ferris, Martin.Gilmore, Eamon.Gormley, John.Hayes, Tom.Healy, Seamus.Higgins, Joe.Higgins, Michael D.Hogan, Phil.Howlin, Brendan.Kehoe, Paul.Kenny, Enda.Lynch, Kathleen.

McCormack, Pádraic.McGinley, Dinny.McGrath, Finian.McGrath, Paul.McHugh, Paddy.McManus, Liz.Mitchell, Olivia.Moynihan-Cronin, Breeda.Murphy, Gerard.Naughten, Denis.Noonan, Michael.Ó Caoláin, Caoimhghín.Ó Snodaigh, Aengus.O'Sullivan, Jan.Pattison, Seamus.Penrose, Willie.Perry, John.Rabbitte, Pat.Ring, Michael.Ryan, Seán.Sherlock, Joe.Shortall, Róisín.Stagg, Emmet.Stanton, David.Timmins, Billy.Upton, Mary.Wall, Jack.

Tellers: Tá, Deputies Hanafin and Kelleher; Níl, Deputies Durkan and Stagg.

Question declared carried.