Dáil Éireann debate -
Wednesday, 1 May 2013

Vol. 801 No. 3

Non-Use of Motor Vehicles Bill 2013: Second Stage (Resumed)

Question again proposed: "That the Bill be now read a Second Time."

Deputy Michael Healy-Rae

I thank the Technical Group Members for allowing me some of their time. I have studied the speech the Minister of State, Deputy O'Dowd, delivered to this House on 24 April, and what he insinuated was quite disgraceful. He is accusing a lot of people of being criminals in that they purposely took holidays from paying motor tax. By association, he has also accused members of An Garda Síochána of being complicit in a practice of allowing people to get away with not taxing their cars. The gardaí are under enough attack at present from the Government and are being badly let down by the Government.

The Minister of State's entire speech was very wrong. He stated that it is not intended to provide for refunds of tax where arrears straddle a rate increase, in view of the difficulties of repaying a large volume of very small amounts. The Minister of State is referring to sums of €10, €20 or €50. He should remember, however, that struggling families may only have €20, €30. €40 or €50 to survive on every week after taking out other expenses. On the one hand, the Government is telling people to button up and manage with what they have. At the same time, however, the Minister of State is saying that if the State owes them money, they can whistle for their ducks, suck their thumbs or bite their lips because they will not be refunded the money. That is a disgrace.

If a person owes money for property tax or anything else, he or she is expected to pay every penny. However, the Minister of State is saying that although people may be owed €10, €20 or €50, they will not get a refund. The sum of €217 is the maximum but even that will not be refunded. Surely to God some allowance can be made in this respect. I appreciate the Minister of State's point that a sum of €10 perhaps cannot be sent out, but if it was owed to the State he would seek it. Surely a system could be put in place whereby when a person is re-taxing a vehicle, he or she could get a rebate of the amount overpaid to the State. That makes sense so I cannot see why the Minister of State would not do it.

Since the Road Safety Authority has taken over issuing driving licences, one cannot get a licence now in County Kerry. I can only speak for my own county where there is a three, four or five-week wait for such documents. When one rings up, the phone is not answered, although that is not the fault of those staffing the offices in Tralee. The people who were there should have been left alone because they were providing an excellent service. One could walk in and get a licence, and if there was a query, one could ring them up. One could deal directly with them, but not since everything has been centralised.

The Government centralised the medical card system and made a mess of it and is now making a mess of this issue. It made a mess of the SUSI grants although the system in place was working fine. All common sense has gone out the window since the Government got into power with its massive majority. It has made a bags of everything it has put its hands on. A carbon tax, which takes effect from today, will rob the elderly of the opportunity to have a little fire in their houses. Is anybody making any apology for it? This day next year it will impose a further increase. It was done in a cute conniving way on May Day. Surely, if there is any God in heaven we will get some good weather and people will not have to purchase as much fuel. However, when they go to purchase fuel at the end of September or October, they will find that the Minister and his famous Government have heaped a carbon tax on them.

An issue that has been ignored is those people who are trying to work. I am aware of a case the other day of a person who wished to tax his lorry which had been idle for the past 12 months. He got work for a couple of months and instead of being able to tax the lorry month by month, he had to produce €800 to tax it for three months. That is not fair to an honest man who had a lorry parked alongside his house and who wanted to get a couple of weeks pay to see whether he could get going again. However, the first obstacle for him is to tax his lorry for three months. He is also penalised for taxing his vehicle for a shorter period by having to pay an increased amount. This is the Government that is blowing about trying to get people back to work. Where is the incentive for a person to go back to work when he or she is hit in that way? In respect of vehicles that incur a large tax, surely it would make sense to introduce a four week system for payment of tax.

The Bill provides for a fine of €4,000 or imprisonment for a term not exceeding six months if a person is found guilty. The Government cannot jail the bankers or robbers, it cannot catch the drug dealers or provide proper vehicles for the Garda Síochána, but it can pursue the ordinary citizen for a €4,000 fine or six months in prison. An honest person in this country can be put in prison for six months but anybody else can do whatever one wishes.

An Ceann Comhairle

I call Deputy Paul J. Connaughton who is sharing time with Deputies Peter Fitzpatrick, Tom Hayes and John Paul Phelan.

Deputy Paul J. Connaughton

I thank the Ceann Comhairle for the opportunity to speak on the Bill. In the current economic climate, all opportunities for tax evasion must be examined and countered. I believe that up to €50 million annually may be lost to the country as a result of false declarations of non-use of motor vehicles and, therefore, the Bill is a common sense approach to closing that loophole. The decline in car ownership reflects the difficulty in which many people find themselves and it is worth considering the increased costs which rural living puts on families, the increased cost of sending children to school, fuel costs for weekly shopping and any extra curricular activities in which children are involved. Less well-off families cannot afford new cars and thus find themselves driving pre-2008 cars with high motor tax. These families are already in distress and are finding it difficult to cope. That is the reason I believe it is imperative that should be no fee should the need arise for them to make a declaration of non-use. Families are already swamped with the number and nature of fees to be paid and if they comply with all regulations by making the declaration of non-use, no fee should apply.

This Administration came into Government at a time when the country's finances were in the mire and it has had to take many difficult decisions in an effort to get the country back on track, to stop racking up the huge debts that had been added to daily life and to carve a leaner and more cost-effective method of governing the country. In order to do that, spending had to be reduced and income, through taxes, increased. However, prior to the Government taking office, too many charges were put in place by people with little or no understanding of how life is on the ground. It should be taken into consideration that for families living in a rural area a car is not a luxury, it is a necessity.

In regard to detection of motor tax evasion I do not believe it should be contracted out to a private firm. While Garda resources are stretched, the Garda come face to face, on a daily basis, with people in great emotional and economic distress and at the current juncture it would be injudicious to contract this work out. Motorists who are caught for motor tax evasion should at least be met in person. I believe that increasing the work of the mobile speed detector vans to encompass motor tax evasion would be counterproductive. Advertisements are running to try to increase public support for the placement of mobile speed check vans. The rationale is that they are placed at locations where there have been serious accidents. Of, course, this is not always the case. I have had many complaints from the people of Mountbellew, County Galway, about the constant presence of speed vans on the N63 approach to the town from the Galway side. On investigation with the Road Safety Authority it appears that, as a result of accidents that occur at the junction in the centre of Moylough, a neighbouring town, because there was no place convenient for the speed vans to park in the centre of the village, they were placed just outside the speed limit in Mountbellew. The location where the accidents occur is in the town centre but the speed vans are located just inside the speed limits in a different town.

Deputy Tom Hayes

The town centre.

Deputy Paul J. Connaughton

Were speed cameras to check for motor tax evasion it would negate the argument that they are there to save lives on our roads and boost the public perception that they are mobile revenue creating machines. Similarly, the idea of using toll operators to check for motor tax evasion is a bad one. Already many people cannot afford to use the best and most expensive roads in the country, the motorway network. Less well-off people are sidelined from these roads as they cannot afford the tolls. The prospect for families who cannot afford to tax their vehicles, being unable to use the toll roads, is a bridge too far. Under the new regime, these people would not be able to declare that their car was off the road and, therefore, the car would have to be scrapped or taxed for that period and that would be sufficient.

The Bill is a necessary step in shoring up the country's finances but should not be used as a stepping stone to the introduction of any further taxes or charges on motorists who are already facing increased carbon charges and ever increasing fuel costs.

Deputy Peter Fitzpatrick

The primary purpose of the Bill is to provide for a system of declaring vehicles off the road for motor tax purposes in advance, closing a tax evasion loophole, whereby owners can declare, retrospectively, that a vehicle has not been in use on the public road, which is unverifiable. It is estimated that the cost of this loophole is in the order of €55 million per annum. The new arrangement for making off-road declarations in advance will make no difference to those maintaining their vehicles on the road and paying tax correctly and will only require those planning to take their vehicle off the road to notify this fact in advance rather than retrospectively. The Bill also provides for transitional financial arrangements, following the transfer of the driving licence function from the licensing authorities to the Road Safety Authority.

Motor tax is payable on most vehicles used in public places. Approximately €1 billion is paid into the local government fund from motor tax each year. The motor tax evasion rate has been estimated at approximately 5%. Currently, it is possible to claim back motor tax if more than three months remain on the tax certificate and a declaration is made that a vehicle will be off the road for a certain period. If motor tax has lapsed and a period elapses prior to renewal, it is possible to declare the vehicle off the road for that period and thus avoid paying tax for the period. The making of a declaration is not verified. Evidence shows there is a problem with false off the road declarations being made with a consequent loss to Revenue. Since 2010, only 160 cases have been taken in respect of the offence of making a false motor tax declaration.

The motor tax system is administered and enforced by a number of organisations. The Office of the Revenue Commissioners is responsible for the registration of vehicles. The Department of the Environment, Community and Local Government is responsible for motor tax policy. The Department of Transport, Tourism and Sport is responsible for the online collection of motor tax as well as maintaining the national vehicle and driver file, NVDF. The NVDF is a database which contains details of all registered vehicles and their owners as well as all licensed drivers in the State. It also provides the basis for a number of other services, including online motor tax, change of vehicle ownership, motor tax, driving licence renewal, vehicle registration certificates and penalty points.

The Garda Síochána also enforces the legislation. It issues and collects the fixed penalties for failure to display up-to-date tax discs and initiate prosecutions where fixed charges are not paid. The Courts Service is responsible for the collection and processing of fines in respect of motor tax offences. According to the Comptroller and Auditor General's report of 2012, the number of Garda witnessed off-the-road declarations increased by 40% in the period 2008 to 2011. During this period more than 1.1 million off the road exemption gaps were declared, with a total value of more than €226 million. While a substantial proportion of declarations made are probably legitimate, it is also likely that some are not.

The role of the Garda is simply to witness the signature, not to confirm that the vehicle was off the road for the declared period of time.

The 2012 figures from the Comptroller and Auditor General show that half of the non-taxed vehicles recorded using the M50 were taxed three months later. However, payments covering this travel period were recorded in fewer than half of these cases. More than 5,000 individuals who renewed their motor tax made a declaration that their vehicle was off the road although that vehicle had been recorded on the M50. Between 2008 and 2011, more than 185,000 fixed penalty notices were issued for failure to display an up to date tax disc. Approximately 145,000 of these vehicles were later taxed.

The Bill may have a positive impact on Ireland's EU environmental obligations. From 2006, there has been an obligation on vehicle owners who are scrapping a car to deposit same at an authorised treatment facility for appropriate treatment and recover. Failure to do so is an offence under the waste management end of life vehicles regulations 2006. Under the new system owners are more likely to go to legitimate waste operators when scrapping their cars as they will have evidence that the car has been destroyed.

Deputy Tom Hayes

I thank the Ceann Comhairle for the opportunity to speak on this Bill. The Non-Use of Motor Vehicles Bill 2013 is important legislation that will simplify the rules and regulations around declaring a vehicle as off-road, and will bring clarity to the situation for car owners and those enforcing the legislation. I welcome the main tenets of the Bill, as will all honest, decent car owners and taxpayers who dutifully pay their car taxes as required - the vast majority of the population. At present a car owner who has not paid car tax for a period of months can walk into a Garda station, fill out a form stating that the car in question was off the road for the previous few months and have this signed by a garda. That is the reality of the current situation. The Garda does not have to validate the declaration by the car owner and need only identify the person making it. This allows a car owner to avoid paying taxes in arrears for the period in question and, as he or she drives home from the station it allows him or her to laugh at everybody else who has paid their taxes. This is clearly wrong and is a loophole that needs to be closed. According to a 2001 study, it is estimated that 5% of car owners do not pay tax. This figure may have risen in recent times as our economic situation worsens but as it is it equates to a massive figure of between €50 million and €55 million per year, according to the Department of the Environment, Community and Local Government. These are the facts. Some €55 million is being lost, a great loss of money to the Exchequer. Given that this money is supposed to be going towards local government funds the situation becomes worse - this is the kernel of the matter. If we take any constituency represented by any Deputy, some €1 million has been prevented from going towards local roads there. We are coming through a difficult economic situation and every local authority in the country is under pressure for funding. I know of no county council that has enough money to do maintenance work on its roads but that €1 million for each constituency could be put towards such maintenance.

I have heard Deputy Healy-Rae speak on this, day in, day out. If he was honest and told the truth in this House, he would have to say that what is needed is more funding for each county council in the country because they are under desperate pressure. What is needed is that €1 million. It would go a very long way in places in my constituency such as the Cahir electoral area, mountainous areas around Hollyford, areas with bad road conditions in Ballingarry and Killenaule. The list is endless yet the Deputy says we should not collect that €1 million. That much was said on the Opposition benches this morning.

Deputy Finian McGrath

Not from here.

Deputy Tom Hayes

I cannot believe that in these difficult and hard times a Deputy would be so innocent and foolish as to come into this Chamber and make statements like that. This is €1 million that can be found and which would make the quality of life in rural areas much better. If roads were better this would encourage tourists into our areas. It would help people to drive their children to school and to go to work. Above all, it would save each individual taxpayer a considerable amount of money on their cars each year because bad roads lead to bad cars and higher maintenance costs. The reality is there would be €1 million available for every county council in the country. There would be many deputations to the Minister for the Environment, Community and Local Government if there were €1 million available for the coffers of county councils in any constituency.

It is fair for the Minister and his Department to introduce this legislation. It is good and fair for the taxpayer but, above all, it will be good for the roads and the local authorities in every part of Ireland.

Deputy John Paul Phelan

I have just a few comments on the legislation as proposed and will refer to some of the discussion and comments I have heard. Deputy Healy-Rae, who is not present, referred to the Minister's speech of 24 April, stating that the Minister more or less accused everybody of being crooks, including gardaí. I read the same speech and certainly did not take that inference from any part of what the Minister stated. A loophole has been identified in the current system, whereby an individual can go into a Garda station to be identified as a person by a garda, but the garda need not identify the owner of the car. The relevant motor tax can then be refunded following that procedure. That loophole needed to be resolved - it is the primary purpose of the legislation - and that was the subject of the Minister's comments on 24 April. I do not see how other motives could be read into what he stated on that particular occasion.

The Deputy also rambled on about the carbon tax. I may be wrong, because I was a Member of a different House at the time, but I was under the impression that the Deputy's father supported the carbon tax when it was introduced. The extension of the tax to include solid fuel was always bound to happen.

Deputy Finian McGrath

The Deputy is his own man.

Deputy Tom Hayes

Facts are facts.

Deputy John Paul Phelan

There is encouragement for people to use more environmentally friendly sources of energy - there is much of that in my constituency and in different parts of the country where wind farms are installed. Deputy McGrath is originally from Galway where there is considerable investment by the university there into a project to study the viability of wave energy. The introduction of a carbon tax was designed, in part at least, to encourage the provision of alternative clean energy sources. It is ironic that Deputy Healy-Rae lashed this particular legislation in regard to carbon tax when, as I understand it, his predecessor was one of those who introduced it.

I return to comments made and I echo what Deputy Hayes noted, being from the neighouring constituency of Carlow-Kilkenny where I see local authorities pushed to the pin of their collar in terms of the funding available to do ordinary road maintenance work. Deputy McGrath would agree this is not only a rural issue. There are parts of this city and other urban areas where the street surfaces are simply not adequate. Any improvement in the funding available for local authorities that will enable them to do necessary repairs and reconstruction work will have a knock-on benefit for the people who travel those roads. It is hugely costly to live in an area where the roads are particularly bad and because of that to face constant repair bills for one's vehicle. The fact that this legislation will lead to an improved financial position for the local government fund and thereby the ability for more funds to be distributed to local authorities is to be welcomed. It is ironic to listen to people such as Deputy Healy-Rae who shout and roar for extra funding for local authorities for the provision of better road networks in their area and then, when the first chance for some extra funding arrives, they are opposed to it. They cannot have both sides of the argument; they are either for or against it.

I suppose that being in opposition allows them to be inconsistent on everything.

Deputy Finian McGrath

Not true. That remark is out of order.

Deputy John Paul Phelan

Deputy Finian McGrath might not be in that category but Deputy Healy-Rae has been very inconsistent on this subject. Given that his own family business is involved in providing services to the local authority in his area, the comments he made this morning beggar belief. It is still possible for people who purchase a new vehicle or change their car, jeep or tractor to transfer tax and insurance. It is a sign of the economic times that the number of registered vehicles has decreased. The current loophole whereby it is not necessary to identify the owner of a vehicle has to be closed. This Bill did not simply fall out of the sky; it has been discussed on and off for quite some time. This is why I have no difficulty in supporting it and I look forward to the time when some of the funds it makes available are spent on the roads in places like south County Kilkenny because they are badly in need of repair.

Deputy Finian McGrath

I am grateful for the opportunity to speak on the Non-Use of Motor Vehicles Bill 2013 and welcome the prospect of closing a loophole worth approximately €55 million per annum. It might surprise Deputy John Paul Phelan to learn that I agree with him on the need to increase revenue by preventing scams or tax avoidance. In the context of our current economic crisis, €55 million is a considerable sum. However, when we speak about motor taxes and the expenditure of taxpayers' money, we should link these issues to the broader debate on taxation.

The primary purpose of the Bill is to provide for a system of declaring vehicles off the road in advance for motor tax purposes, thereby closing a tax evasion loophole whereby owners can declare retrospectively that a vehicle has not been in use on the public road, which declaration is unverifiable. My colleagues spoke about roads and local government services. My area of Dublin Bay North could do with this money but other needs also arise in respect of revenue raising. The cystic fibrosis unit in Beaumont Hospital is seeking €1.7 million. Last night in Croke Park I met Joe Brolly and other people to discuss the funding needed for the organ donation scheme. For many projects, €2 million or €3 million would solve their problems.

The new arrangements for making off-the-road declarations in advance will make no difference to those who pay the correct tax on their vehicles and will only require those who plan to take their vehicles off the road to notify their intention in advance rather than retrospectively. Those who are compliant in paying their motor taxes make a massive contribution to this State. The Bill also provides for a three month transition period following enactment to allow those who are in arrears or who genuinely have their vehicles off the road to regularise their affairs and make arrangements so their vehicles continue to be off the road. The key word is "genuinely". Deputy Tom Hayes estimated that the number of those who use this loophole to pull stunts and scams in order to avoid paying motor tax is between 5% and 10%. It is not fair on compliant taxpayers that such individuals do not pay their fair share of taxes. The Opposition benches have experience of this issue. It is not acceptable, particularly at a time when the country desperately needs revenue. It is a cross-party and citizen rights imperative that everybody contributes in a fair and meaningful manner.

The Bill contains 12 sections, nine of which set out the substantive provisions for off-the-road declarations and three set out transitional financial arrangements following the transfer of the driver licensing function from licensing authorities to the Road Safety Authority and declaring the Minister for Transport, Tourism and Sport a licensing authority for the purpose of motor tax law.

In the past 24 hours a number of reports have issued on the subject of taxation. Many people are not aware that we pay less in taxes than the rest of Europe. The Irish pay less tax than anywhere else in western Europe and our tax rate on company profits is one of the lowest among EU member states. The Government is trying to claw back €3.1 billion in taxes and cuts next year. Figures from Europe show that the amount of money taken in by the Government through taxes and social contributions is equivalent to less than one third of the entire value of the economy. Despite the recession, the figure is lower than what it was in 2000. Only Slovakia has a lower tax rate than Ireland according to the European Commission. The latest data indicate that Ireland's tax to GDP ratio was 28.9% in 2011, compared to France at 43.9%, Belgium at 44.1% and the UK at 36.1%. The social security fund receives 16.4% of tax revenue, compared to an average of 37.3% across the 27 EU member states.

I outline these figures in the context of the debate on this Bill because we must face up to the need to make a fair contribution. We have to be creative and radical in considering new taxes. The Government appears to have problems with taxing wealthy people. It should up its game and investigate the potential for raising taxation. I support the commitments on raising tax contained in this Bill but 15 countries in Europe have a higher top rate of tax than Ireland. The Commission does not state the point at which the top rate applies in the various countries, however. For example, a single person in Ireland pays tax at 20% on income up to €32,800 and 41% thereafter. Irish GDP figures are also skewed because of the impact of multinationals basing their European operations here. The revenues reported by these companies as part of Ireland's economy ultimately make their way elsewhere. We should take cognisance of these facts.

A number of speakers referred to the carbon levy. People can jump up and down about the carbon levy but the reality is that people are suffering because of it. The price of a 40 kg bag of coal will increase by €1.20 and a bale of briquettes by 26 cent. Regardless of the broader environmental and tax issues, we must acknowledge that families, senior citizens and people living in isolation need our support. This levy is having a major impact on these people and the pressure will only increase if, as proposed, the rate is doubled in 2014.

The total tax to GDP ratio in Ireland in 2011, at 28.9%, was the sixth lowest in the European Union and second lowest in the euro area. The figure in 2000 was 31.3%. Direct and indirect taxation accounts for 43.4% and 39.4%, respectively, of total revenue. Value added tax, at 54.1%, accounts for the largest share of tax receipts and is broadly in line with the European average of approximately 53%. At 12.5%, Ireland's corporation tax rate is the third lowest in the European Union, with only Bulgaria and Cyprus having a lower rate of 10%.

Motor tax is payable on most vehicles that are used in public places and approximately €1 billion is paid into the local government fund from motor tax each year. The precise figure in 2011 was €992 million, a 5% decline since 2009 when the figure was €1.045 billion. Part of this decline can be traced to a reduction of 1.8% in the number of vehicles being taxed and the move towards a tax system based on carbon emissions. Given the substantial contribution motorists make to the State coffers, it gets up my nose that we are not listened to in the broader debate on how money is spent and the quality of road infrastructure, services and so forth.

It also gets up my nose when I encounter the anti-motorist attitude that prevails among a section of the cycling population. Many, although not all, cyclists speed around Dublin, jump lights, cycle up one-way streets and clip the wing mirrors of cars caught in traffic jams. I regularly refer to these individuals as "Speedy Gonzales" types who arrogantly believe they are cool, clean heroes in contrast to motorists who are polluting the country. They should know that we motorists contribute €1 billion in motor tax to the economy and we also have certain rights. We should be listened to and taken seriously.

The motor tax evasion rate is estimated to be approximately 5%, which results in an annual loss in revenue to the Exchequer of between €50 million and €55 million. I hope this figure is accurate and has not been massaged, as the Garda Representative Association might say. That 95% of motorists are tax compliant in respect of motor tax should not be taken for granted, especially given the financial position of the country.

It is currently possible to claim back motor tax if more than three months remain on the tax certificate, provided a declaration is made that a vehicle will be off the road for a certain period. In addition, if motor tax has lapsed and a period of time elapses prior to renewal, it is possible to declare that a vehicle has been off the road for the period in question, thus avoiding payment of tax for the period. The making of such a declaration is not verified. Evidence shows a problem with false off-the-road declarations being made, with a consequent loss in revenue. Since 2010, only 160 cases have been taken for making a false motor tax declaration. Clearly, a large number of people are engaged in this scam. They should be targeted to ensure those who pay their motor tax every year are not penalised but are treated in a fair and just manner.

The Bill provides a prospective system of declaring vehicles off the road for the purpose of motor tax, with a view to reducing tax evasion. When a declaration is made in advance it will not be necessary to pay motor tax for the period that a car is off the road. The move to a prospective declaration will mean that individuals will no longer be able to claim, when renewing their motor tax, that a vehicle was off the road during the period that motor tax has lapsed and must thus pay arrears for such periods. Other proposed changes in the legislation include the removal of the current one month grace period for the renewal of motor tax, a provision making it possible to prescribe an administration fee for the making of a non-use declaration and the introduction of transitional financial arrangements following the transfer of the driving licence function from the licensing authority to the Road Safety Authority.

While the Road Safety Authority does great work, it is sometimes a little sensitive to criticism. We have all seen examples of signs on roads which have not been planned properly. Some of the speed limits are crazy, with drivers able to drive at fast speeds on small country roads but required to drive so slowly on certain stretches of motorway that they can barely shift beyond second gear. Sensible decisions must be taken by the Road Safety Authority. I accept, however, that we must up our game on road safety and support road safety policy.

Enactment of the Bill may have a positive impact on Ireland's EU environmental obligations. Owners may be more likely to avail of legitimate waste operators when scrapping cars to obtain a certificate of destruction, without which they may be made liable indefinitely for the off-the-road declaration fee. There is, therefore, an environmental aspect to this important legislation.

The motor tax system is administered and enforced by a number of different organisations. The Office of the Revenue Commissioners is responsible for the registration of vehicles, the Department of the Environment, Community and Local Government is responsible for motor tax policy and the Department of Transport, Tourism and Sport is responsible for the online collection of motor tax and maintaining the national vehicle and driver file, a database which contains details of all registered vehicles, their owners and all licences. It is important that all such information is held.

The Department of Transport, Tourism and Sport has compiled a report on the number of off-the-road declarations made in the year to August 2012. Over this period, the number of Garda witnessed vehicle licence exemptions was 538,312, of which approximately 20% coincided with a change in the ownership of the vehicle in question. It is likely that this category largely consists of legitimate declarations from the new owner or car salesperson. On the other hand, slightly more than 428,000 declarations were made when no change of ownership took place. The resulting loss in revenue to the State was more than €88 million. We need to focus on this issue.

Section 8 creates an offence for the making of a false or misleading declaration of non-use, which on summary conviction carries a class B fine - up to €4,000 - and-or imprisonment for a term not exceeding six months. Section 10 creates an offence for the making of a false or misleading declaration as part of an application for a refund, with the same penalties as those contained in section 8 applicable. The way in which offences are dealt with under section 8 is both fair and reasonable. As already stated, 95% of people pay their motor tax on time and make a contribution to society. In view of the fact that almost €1 billion is coming out of their taxes, it is very important that those who fail to comply should be guilty of an offence. The imposition of a fine of up to €4,000 or imprisonment for a term not exceeding six months should put the frighteners on those who might contemplate not complying with the law.

Reports suggest that there is abuse of the system relating to the scrapping of vehicles, with illegal waste operators being responsible for a significant proportion of scrapped vehicles in Ireland. In 2009, for example, 21,883 certificates of destruction, CODs, were issued, while it was estimated that 152,544 cars were taken off the road. This means that approximately 130,000 vehicles were potentially left unaccounted for in 2009 alone. That is a massive number. Obviously, some of these vehicles might have been declared as being off the road, others could have been exported and others still may have been legitimately destroyed but a COD may not have issued. If there is a lack of proper regulation, then crime and drugs gangs are going to operate on the fringes of the industry. To some, those people may seem to be petty criminals. However, many of the cars are often used in the commission of murder and other crimes. This issue has arisen in my constituency, Dublin North Central. If the State is only in a position to indicate that 21,833 cars were destroyed in 2009 and if 152,544 other vehicles which disappeared from the roads in that year are unaccounted for, then we have a problem.

I thank the Acting Chairman for granting me some leeway. I broadly welcome the legislation, particularly in the context of the €55 million it can bring in to the Exchequer. During this period of economic difficulty, there can be no question of dilly-dallying. If we have the opportunity to close a loophole and bring in an additional €55 million as a result, then we should do so.

Acting Chairman (Deputy Joe O'Reilly)

I understand Deputy Maloney proposes to share time with Deputy Harrington.

Deputy Eamonn Maloney

Is that correct?

Deputy Finian McGrath

No, Deputy Maloney should go it alone.

Deputy Eamonn Maloney

I do not mind with whom I share time.

Acting Chairman (Deputy Joe O'Reilly)

That is fine. Deputy Maloney has five minutes.

Deputy Eamonn Maloney

I do not think I will need five minutes. I welcome the Bill, which is overdue. Some Members have criticised the Bill but I did not hear anything of any great substance which would make me change my mind about it. I may not agree with everything it contains but I do agree with the thrust of the Bill. Legislators have been extremely casual in the past on this issue. An equally casual approach to enforcement has given rise to the difficulties we are experiencing with regard to people either avoiding or evading motor tax. I agree, in principle, that such avoidance and evasion should be brought to an end.

One of the difficulties I have relates to the amount of time members of An Garda Síochána spend policing this issue. I refer, for example, to the fact that people are obliged to go to their local Garda stations in order to verify that their vehicles have been taken off the road. The time of gardaí should not be spent on work of this type because it has nothing to do with policing as I understand it. This duty should be taken away from gardaí.

Many points have been made in respect of end-of-life vehicles and I will not repeat them. This is, however, an extremely serious issue from an environmental perspective. I return to my initial point regarding our casual attitude. Irrespective of which part of Ireland one is travelling in, one can see on our back roads the evidence of our casual approach to end-of-life vehicles. We have not been sufficiently stringent in respect of this issue and that is one of the matters which the Bill addresses. One need only cite the figures from the relevant year which indicate that many thousands of vehicles suddenly disappeared off our roads. That should not be allowed and, as legislators, we should not tolerate it.

I take this opportunity to praise the very fine work done by the Oireachtas Library and Research Service in preparing the digest relating to the Bill before us. The work of the service is always extremely impressive and it is particularly so in the context of the material prepared in connection with the legislation.

Deputy Noel Harrington

I welcome the Bill. It is interesting to note some of the differing views put forward by members of the Technical Group. I welcome Deputy Finian McGrath's support for the Bill. However, I am disappointed with those Members who have used this debate as an opportunity to attack the Government for not funding local government and roads infrastructure throughout rural Ireland. To be honest, that approach is somewhat perplexing.

The purpose of the Bill is to close off a loophole which, as the digest produced by the Oireachtas Library and Research Service indicates, could conceivably cost the State in the region of €88 million. The actual amount might not be as much as that. However, if it is in the correct ballpark then a huge amount of money which should be taken in is going uncollected. It is difficult to listen to some people accusing the Minister of accusing the Garda and public of some kind of conspiracy. Accusations were put forward to the effect that the Minister had admitted that gardaí and members of the public had been complicit in tax evasion. That is completely off the point. This matter is somewhat more nuanced than that and perhaps certain Members just do not get what is involved. The lack of controls relating to this matter could lead to a perception whereby motor tax evasion could conceivably occur. The position in this regard must be tightened up.

The motor taxation collected by local authorities is submitted directly to the Exchequer and then redistributed to those authorities through the local government fund. Ultimately, some but not all of this money is spent on our roads. I am of the view that the majority of moneys collected through the motor taxation system is not reinvested in the national and non-national road networks. I accept that the following matter may not be capable of being addressed in the Bill before the House. However, as time passes and as the position relating to the amount of funding available to local authorities via the property tax, etc., becomes clear, in circumstances where local authorities can raise their own funding then the motor taxation that is collected by them or other agencies should be ring-fenced for road maintenance, reconstruction and resurfacing. Road users are extremely concerned that the tax they pay is not invested in these areas. There is an element of cross-subsidisation in this regard and its days are numbered. I look forward to such cross-subsidisation coming to an end.

I raised a particular matter last week and I was disappointed that the Minister for the Environment, Community and Local Government was not in a position to provide the relevant figures. I refer to the motor taxation which applies in respect of vintage cars.

In the UK, the taxation on vintage cars is nil in most cases. I ask that consideration be given to minimising or removing the taxation of vintage car owners through registered clubs. These clubs do fantastic work in raising money for charities and they would welcome an alleviation of their tax contributions. I was hoping to have the figures for this debate, but they are not significant. Treating the clubs in this way would benefit them and acknowledge the fact that we value their work on behalf of charities throughout the country.

I am concerned about the administrative charge for the pre-removal declaration. It discourages compliance with the legislation. I accept that mandarins within the Department would like to maximise the revenue accruing from the closing of this anomaly, but if we are asking people to take steps to pre-declare so that they can be more tax compliant and responsible car users, it is unfair to charge them as well. We should encourage the declaration system, not discourage it.

I have noted the scale of the problem. According to the research done by the Library service, which I commend, the Comptroller and Auditor General's figures on vehicles using the M50 identified a significant problem, in that cars that had been declared as being off the road were using the toll roads. The figures speak for themselves.

The Bill's measures would go a long way towards acknowledging the immense tax contribution of road users to road maintenance. Regrettably, not all of their taxes are used for the roads. This issue should be addressed.

I wish to ask a technical question on arrears. If a car is sold with motor tax arrears outstanding, the new owner should not be liable to pay them. We need a system to ensure that this does not happen. It is already the case in respect of commercial rates. If a tenant takes over a vacant building on which rates arrears are outstanding, he or she must pay them if they have not been settled by the landlord. This inhibitive system should be addressed.

I welcome the Bill. It is a necessary step in bringing compliance and fairness. For those who are compliant and pay their motor tax, it is inherently unfair that others take advantage of a loophole in the system. If the Bill accrues additional revenue for the local government fund, so be it, but that revenue should be ring-fenced in future for car users and enthusiasts. We would all like this to be the case, particularly those of us in areas of rural Ireland where public transport is sporadic at best and non-existent at worst. Our road network is our lifeline and we would like to see greater investment in maintenance, reconstruction and resurfacing works through the local authorities, which could do with the extra money necessary. I thank the Acting Chairman for the opportunity to contribute on the Bill.

Minister of State at the Department of the Environment, Community and Local Government (Deputy Fergus O'Dowd)

I thank all of the Deputies who contributed. Their contributions were interesting and thought provoking. The analysis on all sides of the House has been excellent.

A point well made by everyone, particularly Deputy Finian McGrath today, is that the Bill's primary purpose is to close a loophole. If we are losing between €50 million and €55 million per annum through motor tax evasion, it is a serious issue. The Bill addresses it. As each Deputy has acknowledged, evasion hurts those who are compliant. Why should thousands of motor tax evaders get away with it? No longer will people be able to take a tax holiday. It is not a victimless crime, as the burden falls on all road users. The existing system was intended to allow people who genuinely had their cars off the road to make signed declarations at Garda stations to that effect, but it has become a source of abuse over the years. There have been many calls to close this loophole.

Deputy Healy-Rae was wide of the mark in accusing the Garda, the Minister and everyone else of co-operating in an abuse. A garda is asked to affirm that the signatory is the person he or she claims to be. The garda is not asked to form a view on whether the car has been off the road or who is the car's owner. I urge the Deputy to read up on the facts instead of imputing motives to the Minister, the Department and gardaí.

The arrangements being put in place are simple and straightforward. They are not designed to inconvenience those who are compliant. Those who need to take their vehicles off the road will still be able to do so, but they must notify the licensing authority in advance. A similar system has operated successfully in the UK for more than a decade and I expect it will operate just as successfully in Ireland.

The Bill's measures are a key first step in addressing the recommendations of the Comptroller and Auditor General in his 2011 report. They will facilitate the putting in place of further mechanisms that may be necessary to tackle any residual minor evasion. In this regard and to reduce evasion, I noted Deputy Cowen's suggestion on the potential sharing of data through the use of existing mechanisms. My Department and the Department of Transport, Tourism and Sport are considering the feasibility of data sharing from traffic cameras as an anti-motor tax evasion mechanism. However, it should be borne in mind that traffic cameras are in place to manage road safety issues and have contributed significantly to the reduction in the number of lives lost on roads in recent years. If traffic cameras were used for data sharing, it should not impinge on the primary safety role of the camera system.

Currently, the requirement on a garda is to witness a statement that a vehicle has not been in use. It is not possible for gardaí to check the truthfulness of statements presented to them, as the persons making the statements are not required to produce any evidence that the vehicles are off the road. A system requiring such evidence would be unworkable and would place unreasonable demands on gardaí. The proposal for the new system is to remove any requirement to attend a Garda station, thus freeing up time that is currently spent by gardaí on administration.

The Bill is not anti-business. If a vehicle is to be parked up until trade picks up, the only action the business person will need to take is to make a declaration in advance. If trade picks up before the declaration of non-use expires, tax can be paid from the start of the current month in the normal way.

The current arrangements for motor dealers - they do not need to pay motor tax in respect of their stock in trade - are not affected by the Bill's provisions. The arrangements have been discussed with the trade and I understand that it is happy with the approach being taken.

Regarding the cost of fuel, I remind the House that, in budget 2013, the Minister for Finance announced a rebate on diesel that will take effect from 1 July 2013. This initiative will support small businesses in all sectors of the economy, as most rely on cost-effective transport for their inputs and outputs. This transport is provided by hauliers, the majority of whom are small businesses.

However, in regard to the introduction of a direct debit system, I have been advised there are no plans to provide a legislative basis for doing so at the moment. As well as requiring significant resources to set up initially, there are a number of potential risks associated with a direct debit system for which we would need to legislate, not least the need to make provision for the cancellation and recovery of motor tax discs where the owner cancels the direct debit mandate or has insufficient funds in the account to meet the monthly charge. It should be borne in mind that introduction of a direct debit payment system would also impact on the flow of income to the local government fund and, consequently, on grant allocations.

At this point, I wish to assure contributing Deputies that ensuring a properly functioning, representative and responsive local government system is of high importance to the Government. The most significant restructuring of local government in over a century is now being implemented in accordance with the action programme for effective local government. We want a local government system that delivers local services in an efficient and effective manner. This debate is not the appropriate forum to outline the full details of the reform programme, but we will deliver a local government system that is fit for purpose for the 21st century.

Deputy Ellis queried the purpose of making the Minister for Transport, Tourism and Sport a licensing authority. The Minister for the Environment, Community and Local Government is currently a licensing authority for the purpose of motor tax online and has been since the online system was set up in late 2003. Amending references to the Minister for the Environment, Community and Local Government in legislation to refer to the Minister for Transport, Tourism and Sport is to reflect that the national vehicle and driver file, which was under the auspices of the Department of the Environment, Community and Local Government, is now part of the portfolio of the Department of Transport, Tourism and Sport. The amendments are technical and make no day-to-day impact on the online system, which has been very successful since its inception and through which half of all motor tax transactions are now processed.

I accept the points made by speakers on the administration fee. The Bill provides for the charging of such a fee through secondary legislation. There is also provision for a range of exemptions, should an administration fee be introduced. The Bill makes no provision for charging a premium over and above the reasonable cost of administration and it could not, therefore, be used as a tax-raising measure.

I wish to refer to a number of points to which reference was made in the debate. There are no provisions in the Bill that affect the current system of allowing a month's grace. It is not a requirement that a vehicle must be notified as being off the road three months in advance. The Bill provides that the declaration must be made in advance, but in the month before the current tax expires, or if there is already a non-use declaration in place, within the month before that expires.

I again thank all Deputies for their contributions. On the question of arrears, I stress that this was a wholly inadvertent error, and was missed for many years. On charging arrears at the rate of one tenth rather than one twelfth of the annual tax per month of arrears, my Department made arrangements to rectify the error in a matter of a week or so, as soon as it became aware of the error. In the case of charging for arrears at the current rate rather than the old and new rates where arrears straddle an increase in the rates of tax, the lacuna in the law was an inadvertent error, again of many years standing. For technical reasons, correcting the rates of tax would be quite difficult and, regretfully, it has not been possible to prioritise the programming work involved. The legal position in respect of charging for arrears will be restored to one tenth of the annual rate following the transitional arrangements for the changeover to the new system, and the system as everyone understood it will be reinstated.

In deciding not to repay the moneys, consideration has had to be given to the potential cost of repaying them. In one tax year approximately 300,000 individuals might have been inadvertently overcharged by small amounts. Considerable expense would be incurred in contacting the individuals to find out if they are still at the same address and in writing cheques for approximately €10 - the amount involved in most cases. It is not simply a matter of issuing cheques to the last known address. We could be accused of, literally, throwing away money. As I have already indicated, the amounts involved are very small in the vast majority of cases and the case for repayment must be balanced against the potential cost of the repayment.

The Department has commissioned a wide-ranging review of the existing producer responsibility agreements which are currently in operation, including end-of-life vehicles. There is no reference in the Bill to that particular provision but the potential for the introduction of additional producer responsibility initiatives to help Ireland to meet its environmental obligations are being considered. The Department expects to receive the report on the review shortly.

More than 240,000 on-the-spot fines were issued for non-display of road tax between 2008 and 2011. I commend the Road Safety Authority, in particular its chief executive, Mr. Noel Brett, and its chairman, Mr. Gay Byrne, who have made remarkable progress in a short time. The reduction in road deaths has been significant and unprecedented since the current road safety campaign commenced, notwithstanding comments made by Opposition Members, which are entirely wrong. The facts speak for themselves. The Road Safety Authority is doing an outstanding job on which I commend it. The Bill will proceed to a vote in the House if necessary. I thank all those who have supported it. I encourage Members to table whatever amendments they wish on Committee Stage.

Question put and agreed to.