I wish to clarify matters relating to new cars registered between January 2008 and July 2008. They will be taxed through the existing motor tax system. Can the Minister clarify whether there will be retrospective payment on taxes already paid? People can re-register under the new system if they pay tax on 1 January for a year. Will they receive retrospective payments for overpaid taxes in the older system?
Motor Vehicle (Duties and Licences) Bill 2008: Committee and Remaining Stages.
Section 1 agreed to.
SECTION 2.
Question proposed: "That section 2 stand part of the Bill."
I will put this on the record because this was discussed on Committee Stage in the Dáil. The Bill is drafted on the basis that rates under the CO2-based system will apply to tax discs taken out for licence periods commencing on or after the introduction of the new CO2-based system on 1 July 2008. This applies to all new cars, whether they are registered after July 2008 or between January and June 2008 and subsequently switched to the new system on renewal of tax. This approach is in keeping with the long-standing practice of changes to motor tax rates.
The system we have always applied does not give refunds as they would be very difficult to administer. We are doing this in keeping with long-standing practice and it makes sense.
I accept what the Minister has said. There is no going back on it but it does not make sense. Where a person buys a car in January 2008, and another person buys a similar car with the same CO2 emissions in July or August 2008, he is penalised to some degree because the new system is not retrospective to January 2008. I accept the Minister's position.
I can give the Senator an example. A motor tax exemption clause was extended in April 2001 to include mountain and cave rescue vehicles. The tax exemption did not come into effect until the motor tax for any such vehicle was due for renewal. A precedent has been set. I am operating on precedent. What the Senator has suggested would be unprecedented.
It would make more sense.
Question put and agreed to.
SECTION 3.
Question proposed: "That section 3 stand part of the Bill."
I wish to raise a few points on the issue of payments. I am sure the Minister will agree that a very good motor tax on-line system is in operation, the take-up of which is increasing. It is a welcome development. Traditionally, people had to take almost a half day off work to have their cars taxed. This facility is working well throughout the country. What are the implications for the new dual system on the on-line system? Has the Minister taken that into account to reflect the additional IT resources or changes that may be needed to allow the system to continue to operate successfully, without any confusion with the new system?
With regard to the phased payment of motor tax, it is welcome that people can pay in three or six monthly instalments. Many people believe that the differential in the three or six monthly payment of motor tax for a full tax year versus the payment for a full year is more expensive. This is unfair to the less well off who probably cannot afford the full year payment. This matter should be looked at. What would it cost the Exchequer to ensure equality for the full year term versus the quarterly and half-year term? For the small amounts involved I do not see why there should be a differential. Nowadays people are budgeting and cutting their cloth to suit. Where people renew their motor tax on a three monthly or six monthly basis they should not have to pay more than those who pay for the full year.
At local motor tax offices there will be a change in the arrangements for the processing of motor tax applications. The national vehicle and driver file, referred to as the NVDF, which is managed centrally by the vehicle registration unit in Shannon, will be adjusted to provide for the application of CO2-based rates. The changes associated with the introduction of CO2-based motor tax charges are quite complex since they involve the creation of an entirely new basis upon which tax may be charged. The estimated cost of the NVDF enhancements is around €250,000. Currently, on first taxing or upon renewable tax, the vehicle owner may attend the local motor tax office or correspond by post or make the application on-line, as the Senator rightly said. We have made those changes and we signalled early on that this was our intention. The adjustments have been made.
The Senator's second question related to cost. The actual cost of a motor tax disc for six months is about 55.5% of the annual rate and for a three-month disc it is 28.25% of the annual rate. This works out at a surcharge of 10% to 11% for a six month disc and 11% to 12.5% for a three-month disc. For a 1.4 litre car, over 50% of the car fleet is below 1400 cc, the extra annual cost is €34 for a six month disc and €40 for a three month disc. The surcharge in the United Kingdom for a six-month disc is about 10%. A three-month disc is not provided for. That is how it is done and it appears to be working effectively. I do not see any real need to change it. It is not for me to decide, it is a matter for Revenue, which is doing it effectively and has complied fully with any requests we made.
I know it is how it is. I know that Revenue does its job very effectively and collects all revenue due. This is an anomaly in the system. Is it a surcharge for extra administration?
Yes, precisely.
With the ever increasing use of on-line registration and payment of taxes, this administration involves the click of a button and posting out a disc. The surcharge is excessive and although it is quite small, it matters to the people paying it because the reason they pay on a quarterly basis is that they cannot afford the full annual payment. Every euro counts in many family households and it is the small things that count. In future reviews I ask the Minister to address this issue in his discussions with Revenue.
The surcharge is to cover the higher administrative costs involved. The current surcharge levels are lower than those permitted under motor tax law. It was slightly reduced in 2001. My Department will continue to keep the level of surcharge under review in light of the expansion of the on-line system to which the Senator referred.
Question put and agreed to.
SECTION 4.
Question proposed: "That section 4 stand part of the Bill."
Yesterday, I mentioned smaller engines and the 9.5% increase on such engines. Is it possible, at this late stage, for the Minister to examine this issue? They are not contributing enormously to CO2 emissions and never have done.
It is not possible. I was quite clear in the Dáil and the Seanad that we are talking about revenue raising.
That is where there is a conflict. The Minister is revenue raising and seeking to lower emissions.
Of course there is a conflict. The Senator's colleagues in the Dáil and the Seanad are, in many cases, speaking out of both sides of their mouths. They are referring to the need to fund local government, but accusing me of being anti-family because we are taxing cars and accusing me of being anti-rural.
The system for funding local government that I inherited is, by any standard, novel. In the context of the forthcoming Green Paper we must examine how we fund local government. I am also the Minister with responsibility for the environment so I wish to reduce emissions. I am trying to do so in as judicious a way as possible. That is the reason we have increased the cost by 9.5% for smaller cars and 11% for larger cars. That ensures a good revenue base for the local government fund. It has not increased for quite some time, even though the rate of inflation in that period is 15%. We have examined the issues and done this in the proper way. We have made amendments suggested by Deputy Coffey's colleagues in the Dáil. These were addressed in detail on Committee and Report Stages in the Dáil. We must examine and review the situation constantly.
In the UK, the bands have been expanded from four to 11 or more because they have noticed that people have changed their behaviour. They are buying lower emissions cars, which has an effect on revenue. We must keep the situation under review, which is what I will do.
I accept that the Minister has inherited a system that has existed for many generations, but the local government fund, of which motor tax is the bulwark, is a debate for another day. Unless all factors are right and there is a proper public transport system, there will be difficulties when people try to use public transport and the motor tax take starts to decline. Where will local government funding come from then?
I do not agree with the Minister about my party colleagues commenting on his anti-rural and anti-family measures. His intent is genuine and the Bill has good aspects, but people and families in rural areas depend on cars. This is a fact of life. We are entitled to raise the issue of the implications of increasing motor tax. When going to work, a city dweller can hop on a bus, the Luas or so on, but the situation for people in rural areas — we must not forget that a large portion of Ireland is rural — is different and there is no point in claiming otherwise.
The United Kingdom will go to 13 bands in April 2009. We must keep under review how to progress. I must take the labelling system I want to introduce into account in the new environment (miscellaneous provisions) Bill.
Regarding rural transport, obviously we will require more buses, but it is important to point out that we must ensure people use the buses. Many of the comfortable buses that get people in Drogheda and Naas to and from their places of work in Dublin are half-empty. The car is seen as being more convenient and a status symbol. We must move away from the idea of going from door to door by car because the result in Dublin, for example, is congestion. Buses must be used and we must avail of every means to promote bus transport in this city and elsewhere. The bus companies want to make a contribution. Some of those with which I have spoken want space on the new motorways reserved for buses to get people to Dublin quickly.
I agree with Senator Coffey, but we must change people's mindsets to ensure they consider the bus as a means of transport. People in Dublin are happy to use the DART and the Luas. The latter is not the most comfortable way of travelling because people must stand while holding onto the roof and sides. However, it is reliable and is on time, which is what people are interested in.
Question put and agreed to.
SECTION 5.
Question proposed: "That section 5 stand part of the Bill."
I welcome the fact that vintage cars will be taxed at a lower rate than they would have been had they been part of the new Schedule. Many vintage vehicle clubs partake in good social events. Perhaps people could save on motor tax if they recycled very old cars instead of buying new cars.
It is an interesting suggestion.
Yesterday, Senators raised the matter of car disposal. Is any element of motor tax similar to the electrical fund, namely, a person buying a new electrical appliance pays a small amount of tax for its eventual disposal? Has consideration been given to a similar scheme in respect of cars?
Local authorities labour under a huge liability in respect of old vehicles that have been abandoned on roadsides and similar locations, which ultimately must be collected and disposed of by proper means. This costs local authorities a considerable amount of money. Has thought been given to this aspect of the disposal of motor vehicles which are old or of no further use?
I refer to the end of life motor vehicle directive, which addresses many of the issues raised. There are some difficulties pertaining to it and I have received a number of deputations stating that certain people are favoured in this regard and seeking to ensure an even playing field. However, such issues are being addressed and the type of car on the road has improved immensely because of the NCT, the manner in which cars are being disposed of and the way in which cars now are recyclable. A number of EU directives address this issue and one no longer sees many old bangers going around the place. Progress is being made at European level in particular. While there was resistance from a number of countries, particularly those countries that manufacture cars, I perceive a sea change at present and a different attitude has arisen. Changes are afoot in respect of the type of cars being manufactured — they are much lighter — what they are made of and their recyclability.
During yesterday's debate, the Senator's colleague, Senator Bradford, noted that although more environmentally-friendly cars with lower emissions are being manufactured, the problem, which I acknowledge, is that more people are buying cars. Families no longer simply have one car and one may see three cars parked in front of a house. We must address car usage and must induce people to use their cars less and to use public transport. However, although this is slightly contradictory because it will result in reductions in VRT, motor tax and all the rest, I also firmly believe that we must ensure that people also buy fewer cars in the long term.
I accept that people now drive better and more environmentally-friendly cars. The point I was trying to make, which the Minister picked up on, pertained to the disposal of redundant cars. Such cars have little resale value and I am told fully motorised vehicles can be acquired in some places for €30 or €40. Sometimes one sees them lying about in fields and on roadsides. Local authorities and the Garda are encountering difficulties with them. Youngsters probably buy them at a very cheap price simply to joyride in them.
Moreover, people who are unable to trade in cars that are very old and cannot command a good price simply abandon them. The plates and chassis numbers are removed and the cars are dumped in forests or at roadsides and it costs the local authorities a lot of money to dispose of them. I take this opportunity to ask the Minister to induce the Department to examine this aspect of the disposal of vehicles to ensure that local authorities have adequate resources to deal with this problem.
I assure the Senator that I will do so.
Question put and agreed to.
Sections 6 and 7 agreed to.
Schedule agreed to.
Title agreed to.
Bill reported without amendment and received for final consideration.
Question proposed: "That the Bill do now pass."
I thank all Members for their contributions to this debate. As I said at the outset of the deliberations on this legislation and reiterated in the Dáil, the Bill is intended to address a number of issues. The need to expand funding for local governments is the reason behind the increase of 9.5%, and 11% in respect of larger cars. More importantly, it will move motor taxation to aCO2 -based system and bring about a change in behaviour among motorists.
I have been candid about the need to make amendments in the Dáil because of the changes in behaviour which we have already seen. People were waiting until 1 July before purchasing cars, which gave rise to the possibility that they may have decided to further postpone their purchases until next year. That would have resulted in a major decrease in VRT revenue. We addressed those issues in a fair minded manner while retaining the essence of the legislation. We are breaking new ground, so it is essential that we review, and refine where necessary, the new system as we implement it. The need for regular reviews is highlighted by the experience of the United Kingdom, where the initial four CO2 bands will be extended to 13 bands from 1 April 2009. We are on a learning curve and will have to observe carefully how behaviour changes. With the Minister for Finance, I will have to work carefully to prevent any major losses in revenue.
I am grateful to all the Senators who contributed to the debate on this Bill and I wish them a happy and peaceful Easter.
I thank the Minister for attending all Stages of the Seanad's deliberations on this Bill and commend his officials on drafting it. Attitudes are beginning to change and we have turned a corner with regard to car purchase decisions. The general thrust of the Bill is positive and I hope it achieves its objectives.
The Minister has assured me that he will keep motor tax under review. It is an important element of local government funding, although I am not sure of its long-term sustainability if we reduce our CO2 emissions and improve public transport. A conflict in thinking arises in that regard. The Minister will be breaking through his projected €1 billion ceiling for motor tax collection. I hope that money will be well used by local authorities. They need the resources if they are to carry out their functions properly and, while they are doing much good work, improvements need to be made in certain areas. The forthcoming Green Paper on that issue will be very interesting and I look forward to the debate on it.
I wish the Minister and his officials a happy Easter.
On behalf of my colleague, Senator Brady, who is Fianna Fáil's Seanad spokesman on the environment, heritage and local government, I thank the Minister and his officials for taking this Bill through the House during Holy Week. I also thank Senator Coffey and the other Senators who contributed to the debate on the Bill.
I wish the Minister, his officials and all my colleagues in the Seanad a happy and peaceful Easter.
Question put and agreed to.
When is proposed to sit again?
On Tuesday, 8 April at 10.30 a.m.