Is cúis áthais dom é an díospóireacht seo a oscailt sa Seanad. The primary purpose of this Bill is to provide for a system of declaring vehicles off the road in advance for motor tax purposes. This will close a loophole whereby owners can declare retrospectively that a vehicle has not been in use on the public road, which is unverifiable. Under the existing system, a retrospective declaration can be made on the motor tax renewal form that the vehicle was off the road. While the owner's signature is witnessed by a garda, there is no requirement on the garda to verify the veracity of the statement made by the owner. There is no doubt that in many instances, owners risk driving for a month or two without tax. If they are not stopped at a Garda checkpoint during that time, they subsequently declare that the vehicle was off the road, thereby avoiding motor tax arrears. They can then tax the vehicle from the start of the current month. This is unfair to the majority of people who are compliant. As a consequence of the increasing use of such declarations, moneys are being lost to the local government fund, which provides funding to local authorities and the roads programme of the Minister for Transport, Tourism and Sport.
An analysis of Garda-witnessed vehicle licence exemptions showed that 539,000 such declarations were made during the 12 months to the end of July 2012. The value of those declarations was over €110 million, of which €22 million related to changes of vehicle ownership. The remaining €88 million related to exemptions not linked to change of ownership, with the majority of such declarations being made for periods of between one and three months. While some declarations will be genuine, obviously, it is suspected that there is widespread abuse, potentially costing up to €55 million per annum. The implementation of the measures contained in this Bill could increase the income from motor tax by up to this amount, although residual levels of evasion may remain. It will be necessary to make provisions for genuine periods of non-use of a vehicle, for example, in cases of illness or work overseas. It will be possible to make a declaration in advance for periods of between three and 12 months, the same minimum and maximum periods for taxing a vehicle. The declaration must be made at any stage in the month before tax is due to expire. The 2011 annual report of the Comptroller and Auditor General also contained a chapter highlighting the level of motor tax evasion and recommended that a more robust system be put in place to deal with vehicles being off the road. The system provided for in this Bill conforms to an important element of these recommendations.
I wish to set out the specifics of the proposed arrangements. As I have indicated, a declaration of non-use must be made in the month before motor tax or an earlier declaration of non-use expires. However, owners of new or newly-purchased vehicles will have ten days from the date of purchase to furnish a declaration if the vehicle is not to be used immediately. The vehicle can be declared off the road for any period, in whole months, of between three and 12 months. In the month before the declaration expires, the owner will receive a renewal notice and can then either tax the vehicle or make a further declaration of non-use, again for a period of between three and 12 months. The vehicle can be put back on the road at any time during the period specified in the non-use declaration by taxing the vehicle from the start of the month in question. The non-use declaration will then be deemed to have been withdrawn or cancelled. A vehicle may be used during the period of a non-use declaration solely for the purposes of bringing it to or from a test centre, or bringing it to or from a premises for repairs when an appointment has been made with an authorised tester after the repairs have been carried out for a subsequent test.
The Bill creates an offence of making a false or misleading non-use declaration with liability to a fine of up to €4,000 and-or six months imprisonment on summary conviction. This will be in addition to the existing penalties for non-display of a valid motor tax disc. While the Bill provides for an administration fee to be prescribed, we do not plan at this moment to prescribe a fee. The emphasis is on ensuring vehicle owners take the opportunity to regularise their affairs. There will be a three-month transition period in which to do so. Following that period, it will no longer be possible to make a retrospective declaration of non-use. The Minister intends to widely publicise the proposed changes in the coming months with a view to ensuring motorists are aware of their obligations in this regard. The Bill also contains provision to make the Minister for Transport, Tourism and Sport a licensing authority. Responsibility for the national vehicle and driver file, which administers motor tax online, was transferred to the Minister for Transport, Tourism and Sport in 2007, while the Minister for the Environment, Community and Local Government retains responsibility for motor tax policy. The provision sets out the role of the Minister for Transport, Tourism and Sport more clearly. This change will have no bearing on the flow of income to and from the local government fund. Income from motor tax online will continue to accrue to the fund and will continue to be allocated between roads and general purpose grants in line with agreed protocols.
The Bill contains provision for transitional financial arrangements following the transfer of the driving licence function from licensing authorities to the Road Safety Authority. With the introduction of a plastic card driver licence from January 2013, responsibility for driver licensing transferred from local authorities to the RSA. The RSA has put arrangements in place for the issuing of plastic card licences. They are also proceeding to centralise front and back office operations. However, as all elements of the new arrangements are not yet operational, the RSA has made arrangements that local authorities will continue to provide these services for a transitional period, expected to be until September 2013. During this time, all driver licence revenues will continue to be deposited in the Local Government Fund, LGF, with the portion of these revenues derived from the increase in driver licence fees that took effect from January being paid from the fund to the RSA. The Bill also provides that the cost to local authorities of providing the driving licence service can be taken into account in deciding on allocations from the LGF to the local authorities. When the new structures are fully established, all driver licence revenue will flow to the RSA.
I would like to bring the attention of the House to the provisions of section 6, where it is provided that monthly arrears are to be charged at one tenth of the annual rate of motor tax. In the course of drafting the Bill, it emerged that the legal power to charge a penalty rate for arrears of motor tax was inadvertently removed from primary legislation some years ago. Notwithstanding this, monthly arrears continued to be set at one tenth of the annual rate and charged at the current motor tax rate - that is, the historic rate was not applied if the arrears period straddled an increase in motor tax. Once the problem emerged in October 2012, the Minister revised the arrears rate to one twelfth of the annual rate of motor tax per month. There were 375,000 instances of overcharging totalling €3.8 million in 2011, with the average payment just over €10 and 93% of payments under €20. The costs associated with directly repaying the excess tax charged would, in a large proportion of the cases, exceed the amount of money due to the individual.
In regard to the charging of arrears at the current rate of tax when the arrears owed straddle a change in the rate of tax, this is of significance for a number of months immediately after an increase in motor tax rates. Calculating arrears based on a split calculation creates difficulties in the national vehicle driver file, and it is not intended to provide for refunds of tax where arrears straddle a rate increase. In regard to the rate increase from 1 January 2013, it is estimated that the overcharging amounts to less than €10 in over 92% of cases and less than €20 in over 98% of cases. Given the need for a deterrent against late payment of tax, the Bill reinstates the monthly arrears rate at one tenth of the annual rate of duty at the current rate of motor tax. However, arrears payable during the transition period will remain at one twelfth in order to encourage those in arrears to bring their tax up to date.
To conclude, I wish to stress that the new arrangements being proposed in this Bill will not impinge on compliant taxpayers in any way. This is an anti-evasion measure and is designed to close off a loophole that is being widely abused. Those who need to take their cars off the road for any reason will be facilitated, but they must notify the motor tax authorities in advance.