The Irish motorist, the motor industry and businesses that rely on private transport vehicles have sharply felt the effects of the recession in terms of motor related costs, car sales and employment in the industry. Budget 2013 included new measures that will have a further effect on both consumers and car dealers.
The Irish motor trade was and remains a significant employer in this State. The sector accounted for 49,600 employees at the beginning of 2009 but had shed 14,300, or 29% of its workforce, by the end of that year. Sales of both new and used cars are down as the customer feels the bite of lower disposable income, restricted lender financing and higher motor related charges.
It is essential for our economy that people can operate vehicles to get to work and to do business. A balance, of course, must be struck with the need to raise revenue and protect the environment. The balance in this Bill has been set wrong. It puts too much burden on motorists and does not target fuel inefficiency enough.
Successive changes in motor tax, VRT and excise duty costs have added to the strain on the industry. Fuel duty on petrol and diesel has already seen five changes since 2008. Irish motorists will be spending €1,400 a year more on fuel than they did just three years ago if current forecourt prices are maintained. In total, motorists are paying 23% VAT on motor fuel in addition to mineral oil tax and carbon tax of 58.8 cent per litre on petrol and 47.9 cent per litre on diesel.
The motor tax system received a significant overhaul in 2008 as the Government moved from an engine based tax to a carbon emissions based tax, in line with most other western European states. The number of EU countries with CO2 related car taxation went up to 15 in 2009 and Germany moved to the system in 2010. This move from engine capacity to emissions based taxation had the intended effect of shifting consumption towards more environmentally friendly vehicles.
However, it also had the effect of collapsing motor tax receipts and negatively impacting on the used car sales market, as cars registered before 2008 stayed in the old tax system based on engine size. The motor tax system is currently attaining its desired outcome, that of directing consumers away from fuel inefficient cars. The system must be made to take into account the carbon emissions of an engine, engine capacity and the value of a car in a fair, progressive, tax positive manner.
This must all be done in conjunction with a target based climate change policy like the one recently published by my colleague Deputy Brian Stanley. It must also find ways to support motor based industries which may make the shift to greater fuel efficiency but will still have to deal with a high and rising cost of doing business.
Over the last few years the cost of staying on the road for many motorists has climbed considerably while public transport alternatives have also risen in cost and services have been cut. There are many more people today who need private transport more than ever. This is a problem from an environmental point of view which is key to all our policies in the face of climate change, but this problem is precipitated by the large cuts to public transport which is more environmentally friendly and efficient but requires political will, planning and vision if it is to be provided properly.
Many people are left with no alternative but to use private transport and they are being forced to pay more now for something they have no choice in.
On average, motor tax on private cars registered from July 2008 will go up by €53 a year. These vehicles have already had their motor tax raised in previous years and considering those increases, this is quite a large hike. For some people this will be the last straw that makes private transport unavailable to them, given the very tight budgets many people operate on today.
Businesses also are on tight budgets. Small businesses which employ many people across the State and which the Government claims to want to help will be hurt also by this budget. Goods vehicles which are needed for doing business and for employing people will be, on average, taxed €117 more a year. This might not put goods vehicles off the road but could have the negative effect of workers getting fewer hours or pay cuts in order to shore up profit for the business, as is unfortunately a far too regular practice.
Vehicle registration tax, VRT, is also set to go up by as much as 3%, making it more difficult for people to upgrade to more environmentally and economically friendly vehicles which would be liable for less motor tax. This is a particular problem for many of the taxi drivers I am in contact with through my office. They will, through new regulations, have to upgrade their vehicle regularly to keep up with more regular testing after nine years. These are people who are already struggling to pay their electricity bills and fill their taxis with petrol. It is also worth noting that higher VRT makes upgrading to more fuel efficient and environmentally friendly vehicles more difficult for motorist who otherwise would like to do so.
Ordinary people seeking to drive to work, small businesses seeking to transport their goods, even school buses, tractors, hearse and construction vehicles are now less affordable and people are once again hit harder by this Government, for no other reason than its unwillingness to tackle those on high earnings.
The system of taxing motor vehicles must be reviewed and future-proofed by redesigning the motor tax bands to reflect carbon emissions, engine capacity and vehicle value. This will make the system progressive. The more expensive and inefficient the car, the more motor tax is paid. This will also maintain the incentive to purchase environmentally friendly vehicles.
This reviewed system would, I believe, generate more revenue and this increase on current revenue take could and should be redirected in order to reduce excise duty on petrol and diesel. Fuel costs are having a detrimental effect, not just on consumers but on businesses as well. Hauliers, for example, last year pointed out the need for a rebate on fuel costs in Ireland. The Government listened, and I welcome that. I believe coach owners are also being listened to.
Cost pressures on the haulage sector have seen haulage licence numbers drop by 1,300 in the last three years, leading to an estimated 10,000 job losses. Similar helpful measures must be looked into for other businesses for which petrol and diesel are a large part of their expenses. In its budget submission, Sinn Féin put forward a budget-neutral way of cutting excise duty on fuel by 5%. This was not adopted but would have had a very positive effect on the balance sheets of many businesses and household budgets.
Increasing motor tax revenue can be done in a way which is fair and continues to encourage a move to more environmentally friendly vehicles if we follow the approach of scaling rates on the basis of vehicle price, CO2 emissions and engine capacity. Doing this would allow the State to help struggling businesses, which would only further help the local economy, protect jobs and stimulate further the motor industry.
People do not see the benefits of these taxes. There are now numerous taxes attached to the motor industry, with tolls, metres, VRT, road tax and others but people do not see any benefit in local authority areas. We will drive people out of work because we will prevent them from using their own vehicles because costs are too high. We will cut down on revenue income by making it too expensive to drive.
There is a disparity in pricing between garages. The north side of Dublin seems to be dearer than the south side of Dublin, I do not why. The Minister should examine this and tackle garages, bringing them into the committee to explain the disparity across the city and State as a whole. Other European countries have moved towards tax based on emissions but we are moving away from that. We gave motorists a kick in the teeth in 2008 when we incentivised them to have CO2 friendly cars but now we have reneged on that in a further blow to motorists. This is being driven by a loss of revenue not environmental considerations on emissions.
Sinn Féin opposes this Bill because it is out of proportion to what is needed to generate proper revenues in the industry, to address problems in the industry as a whole and to make it fairer. It is not fair to look at this as a revenue raising exercise, we must look at it in terms of emissions and our meeting European targets in this area.