Seanad Éireann debate -
Tuesday, 28 May 2013

Vol. 223 No. 9

Non-Use of Motor Vehicles Bill 2013: Second Stage

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

Minister of State at the Department of Communications, Energy and Natural Resources (Deputy Fergus O'Dowd)

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.

Senator Paschal Mooney

I welcome the Minister. While Fianna Fáil supports the Bill, we have some concerns. For example, the move towards in-advance declarations will reduce the scope for tax evasion but must be properly enforced in order to be effective and to have a positive impact on State revenues. Car owners should not be unfairly charged for making an off-the-road declaration, given that they will not be using that vehicle on the roads.

While efficiencies are welcome, the Government's transfer of driver licence issuance to the RSA, away from local authorities, is, in our view, symptomatic of a broader agenda by the Government to emasculate local government by stripping it of its powers. We had this debate in the House at the time, and it was made clear by us and others that this was yet another example of the removal of a function of local authorities. It seems to be set against the Government's stated agenda, which is to try to give more power to local authorities, and it was not possible to understand why this function was being taken away. However, this situation has been enshrined further in this Bill.

The Bill is to provide for a prospective system of declaring vehicles off the road for motor tax purposes, which is being done in order to reduce tax evasion. It seems the last major roadside survey of the extent of the problem was held as far back as 2001 and found there was a 5% non-compliance rate. More recent figures based on vehicles passing through the M50 toll on four dates in 2010 and 2011 showed that approximately 7% did not have up-to-date motor tax discs. If the evasion rate is 5%, this means approximately €50 million in revenue is lost each year in motor tax evasion, but this may be as high as €88 million. Nobody can stand over those figures. Certainly, at a time when local authorities are cash-strapped, and given that much of the money is going back to local authorities, any effort to address this issue of evasion is to be welcomed.

We suggest the Bill will have a positive environmental impact in that owners may be more likely to go to legitimate waste operators when scrapping cars in order to obtain a certificate of destruction as, without this, owners may be liable for the off-the-road declaration indefinitely. There is one aspect I am curious to know about. What happens, for example, to a car that is involved in an accident where the local garage owner decides that, while the car could be restored to roadworthiness, it will not go back on the road and will be left until such time as the parts are sold, but it is not actually destroyed and the car is still an entity? What is the law in this regard and does the status quo apply? I understand the normal procedure is that a garda would sign an off-the-road declaration, which is then legally valid. Does this situation change under the new law? In that context, the Minister of State might clarify what happens to those cars that are already disposed of but that have not received a certificate of destruction, given that the two questions are related.

The prevention of continuing abuse is dependent on sufficient enforcement by the Garda and we feel that industrial disputes with members of the Garda Representative Association could undermine the impact of this Bill. The decision of the GRA, for example, to exercise its discretion and not issue fines for revenue-gathering offences, including motor tax offences, undermines the capacity of the Bill to raise revenue. The Minister of State might have a view on this. We would suggest this is part of the consequence of the somewhat dangerous adversarial and contemptuous approach by the Minister towards An Garda Síochána, as exemplified in recent weeks.

In light of these issues, it has been suggested that consideration could be given to creating a system similar to that being used for speed check cameras, whereby the detection of motor tax evasion could be contracted out to a private firm. Alternatively, given that many of the country's tollbooths record the registration numbers of the vehicles passing through them, it could be possible to use this information, with appropriate legislative foundation.

Once again, I emphasise that enforcement is the key to successful implementation of this Bill. The prospect of charging for off-the-road certificates was raised and the Minister of State pointed out that this would not be included, at least in the initial years. However, we suggest it would be deeply unfair for drivers to be charged for non-operative vehicles that are not being used on the roads.

As I said, the Bill provides for transitional financial arrangements following the transfer of the driving licence function from licensing local authorities to the Road Safety Authority. While Fianna Fáil supports the EU directive standardising driving licences across the Continent, due to the obvious conformity and security benefits, the removal of the role of local authorities does reflect a broader emasculation of local government. For example, Cork County Council offers an on-the-spot licence renewal system that will now be lost with centralisation. It is important that we recognise the benefits local flexibility can enable, and not simply engage in knee-jerk centralism.

On another aspect, is there a suggestion that the flexibility that is built into the current system, whereby gardaí can give a period of grace of up to one month to have one's motor tax renewed, is being removed completely? While I am not sure this comes within the scope of the Bill, the Minister of State might advise whether there is any change in this discretionary provision. What is the legal situation in regard to a driver whose tax is perhaps a week or two out of date?

Senator Cáit Keane

I welcome the Minister of State and the Bill. The closure of a loophole that costs the State in excess of €55 million per annum must be welcomed. We all abhor tax avoidance and loopholes. This solves a problem and I congratulate the Minister for bringing it forward. 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 and that will not change. 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 Bill is aimed at stamping out this tax evasion and closing off a loophole that has been there for too long.

However, I do have a few small issues with the Bill that would affect a small number of vintage car enthusiasts. Their hobby is threatened by aspects of the Bill and a small number of changes would make a big difference in this respect. The implementation period is three months. I do not know if every vintage car owner in the country or possibly people who do not know they have a vintage car would be aware of this. In his statement, the Minister of State spoke about publicising it. Is three months too short? Perhaps the Minister of State would look at extending the period or making sure an extensive educational campaign is undertaken to ensure that everybody with cars sitting around are aware of it.

Many people buy vehicles for future restoration as they become available. More often than not, there is not an immediate change of ownership. Section 7(9) of the proposed Bill requires the person seeking the declaration to be the registered owner of the vehicle. To fulfil this, the vintage enthusiast may need more than three months. Sometimes, change of ownership of a vintage car is not as straightforward as buying a new car. Could the Minister of State look at changing the time period from three to six months? A large number of enthusiasts will have emigrated in the recent past and put their cars in storage. It may be difficult for them to get everything sorted in the short time frame if the car is locked up. I am only talking about classified vintage cars. There are many forgotten classics in barns and sheds all over Ireland. Some Members may know of relations who put the car in the shed and forgot about it. It turned out to be a very valuable car, the elderly owner died and the car is now in the stewardship of a family member who does not know it is a vintage classic or a valuable car. The Bill may be enacted without them realising this so the three-month period could easily pass them by unnoticed. All those owners wish to be compliant with the law but through default, they might find themselves with a huge bill for arrears.

Under the current proposal, the declaration will have to be made annually. The Bill does not state how this will occur. Will local authorities, or some other body, have to contact the vehicle owner annually to remind them? If so, will this place a large cost on the State? It is also dependent on the owner resubmitting the declaration. I suggest that serious consideration be given to putting the onus on the owner to make the declaration that the car will be off the road until such time as the owner wishes to put it back on the road rather than having the State follow up on an annual declaration. How will it be followed up? This approach has been implemented in the UK version of this system since early 2013. The statutory off-road notification has been in operation in the UK for many years and has proven to be a successful model to take lessons from. This move to an off-the-road declaration for life rather than on an annual basis would no doubt save millions in administration costs and make the system more workable for the reasons below because there are administration costs for licensing authorities, which will probably be the local authorities. If they must follow it up, it will cost money. Vehicle owners will not be able to say they forgot to renew the declaration or they did not realise it had expired. There is no excuse for them not doing it. There is no onus on the vehicle owner to remember to do this annually. There is no loss in revenue to the State or local authority as there is currently no charge for the declaration. A declaration for life will not affect the implementation of the Bill in any way and will make management and enforcement of the Bill much easier. The majority of vintage car owners' cars are off the road for periods far longer than a year. The Minister of State referred to cars that were off the road for long periods of time.

With regard to arrears and fines, I agree that it is only right and fair that there are strict and heavy fines for people not abiding by the laws of the State. There is an issue with charging arrears that will affect the hobby of vintage owners. As regards arrears for vintage cars stored in sheds, the owner might decide to scrap the vehicle rather than pay the arrears. One could lose a good classic vintage car that way. We could end up with a situation where there would be no vintage cars or very few on the road. What happens if it comes to light after 20 or 50 years? They are a much sought after commodity on the open market so could the Minister of State see how it could be dealt with? Is there a special case for vintage car owners or registered vintage car owners?

While under the current proposal, there is no administration charge, there is provision for one to be added in the future, with certain exemptions. In the explanatory memorandum published alongside the Bill, it states that cars with an annual tax rate of under €119 will be exempt from possible administration charges. This gives rise to a number of issues. It is not clearly outlined in the explanatory memorandum or the Bill and no figure is mentioned. This may be changed due to its connection to other sections of other Bills. Would cars eligible under the vintage tax rate be exempt from this charge? Has the Minister of State considered this administration fee for vintage car owners or an exemption for vintage cars?

I acknowledge the role of An Garda Síochána in enforcing the law in this area. It issues and collects the fixed penalties for failure to update 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 for 2012, the number of Garda-witnessed off-the-road declarations increased by 40% in the period from 2008 to 2011. During the 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.

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.

What does that tell the Minister? However, payment covered the travel period recorded in less 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.

There is clearly a need to undertake measures to stop motorists from evading motor tax by retrospectively declaring that their vehicles were off the road. It costs the taxpayer more than €55 million per annum and it is hard to find fault with the rationale behind a law that will close a loophole that allows people to do this. I support the Bill and its passage through the House. I ask the Minister of State to take into consideration the issues I raised in respect of the vintage car owners and the culture surrounding that hobby and the administration of the tax involved including the arrears and fines.

Senator Sean D. Barrett

Cuirim fáilte roimh an Aire Stáit. Tá pointí suimiúla sa reachtaíocht seo. Is dóigh liom go bhfuil an Teideal mícheart ar an mBille, áfach.

I thank the Minister of State, as always, for coming to the House. We always have good debates when he is here. He is supported on all sides of the House for trying to clamp down on the evasion of motor tax. However, in some cases, as Senator Keane mentioned, it might not be a matter of evasion and it may relate to the nature of what is going on in the economy. The business of car hire companies is not even throughout the year. They have to make a gamble in putting their cars into the various airports throughout the country without any guarantee that they will be hired. What is the position in that respect? There are difficulties in anticipating in advance how the tourism season will go and I am saying that at a time when there is optimism in that sector.

The same issue applies to plant hire companies. Their outlook has been very bad but it may improve. We hear plans for increases in capital expenditure but there was an immense decline in such expenditure in the past five or six years. It might be difficult for those companies to gauge the level of business they would have and how they should arrange the taxation of their vehicles.

Dublin Bus has a huge car park at Pace near Dunboyne that was built to facilitate rail commuters to and from the Docklands, Connolly and Pearse Stations. Dublin Bus has many buses parked there and it obviously felt there were good prospects in having that facility there but this was before the recession started to bite.

There are 5,000 fewer taxis on the road, and this is an issue we discussed with the Minister of State, Deputy Kelly. The number of taxis has decreased by 5,000 since 2008. We have to allow people to adjust to what is happening in the economy and to be flexible, being mindful that nobody in this House will support anybody engaged in tax evasion or avoidance. The Minister of State has our support on that.

Ideally in economics, and this relates to what Senator Keane said about the M50, the charge should be for using the road. That is where the cost arises for the State and perhaps increasingly more of the cost of road use should be taken through tolls or through the kind of monitoring that is done on the M50, and in a sense the fuel tax covers that in any event. Possession of a vehicle does not necessarily involve the Minister of State's Department in any expenditure, rather it is the use of the vehicle that requires his Department to construct and maintain roads.

With the recession, there is a seasonal migration of people from places such as Donegal and so on. Can arrangements be made to collect the tax when cars are used in this country as opposed to when the cars are not in use when people are in other countries? The level of migration from Ireland unfortunately has increased substantially during the recession. Those issues are covered in the Minister of State's speech and he has shown himself to be flexible but not where evasion is concerned. He has caught the feeling of the House and I hope he will be able to address some of those points.

On the Title of the Bill, the simple point is that the Title "Non-Use of Motor Vehicles" absolutely describes what is in the Bill until one gets to Part 4, which deals with the amendments of sections 4 and 6 of the Local Government Act 1998 covering arrangements for the payment of motor tax into the local government fund, the transfer of the driving licence function to the RSA, allowing payments from the local government fund to the RSA at section 12(a), provisional arrangements and the cost of administrating them and so on. As Senator Mooney said, the evasion rate of 5% is costing us €50 million annually, and we are talking about €1 billion in this context. There is a considerable amount to be disbursed and controlled and, as the Minister of State mentioned, the Comptroller and Auditor General has investigated it. I am in agreement with both parts of the Bill but the part at the end of the Bill is completely different and does not refer to the non-use of motor vehicles. Rather it refers to the use of vehicles, the taxes to be paid and how those taxes worth more than €1 billion in revenue are to be dispensed. In the era of transparency the Title of the Bill should reflect what is in it. What the Minister of State seeks to do in both parts of the Bill is important and I support it but the Title should incorporate that. A person trying to figure out the details of how this €1 billion plus is disbursed would need to be fairly inspired to know that the rules are contained under the Non-Use of Motor Vehicles Bill. I will leave that with the Minister of State. It is not a matter I would push at any Stage of the Bill. The Title of the Bill in general should reflect what the Bill seeks to do. This Bill will do two important things. I wish the Minister of State the best of good luck with both, but the later one should feature in the Title.

Senator Denis Landy

I welcome the Minister of State to the House. I do not want to go over the ground that has been covered and, therefore, I will deal with only a few issues. I welcome the legislation. It makes a good deal of sense. I come from rural Ireland like the Minister of State and travel lesser roads to get on to good roads. I travel many bad roads to get on to the motorways. Funding is needed to repair the roads, particularly following the weather last winter.

I would like question the Minister of State a little on the opportunities the Bill will provide for people in this area. He referred to the fact that there will be no administrative fee under the legislation to have the facility covered provided. If there is not be a fee, there should be a requirement that people would have to prove that what they say is genuine. The current position is that people can make a declaration regarding the non-use of their vehicle at their local Garda station. From the statistics we have been given, more than half a million people called to Garda stations in 2012 to declare that their car was off the road for so many months and they were credited for that and basically got away with it. If a fee is not to be charged, could there be a link with the insurance provider such that the insurance certificate provided by the insurance company would state that the car insurance premium was put on hold for a period because the policyholder went abroad, was ill or whatever the reason may be in order that there should be some type of a verification system? People will continue to try it on and such evasion amounts to €50 million per annum in loss revenue.

I support what Senator Mooney said about the transfer of the licence function from the local authorities to the RSA. I have spoken on that previously in the House and I do not support it. It will constitute a diminution in the powers of local government and local authorities. I want to put on the record that I believe it is a retrograde step.

I wish to ask the Minister of State about the provision to be able to declare the non-use of a vehicle for a period between three months and 12 months. A person could have his or her vehicle off the road for two months while he or she was being hospitalised and no account can be taken off that. I would like the Minister to reconsider that provision.

The Bill provides that a person can drive his or her car to have an NCT carried out or to take it to the garage in preparation for the NCT.

That is a loophole. There is an opportunity for a person to set the date for the NCT, to move it forward by way of a telephone call, use the car to go to the garage on the day he or she is stopped and have a text to show the Garda the car is being taken to the garage as the NCT is due. The legislation allows for that. There is a need for a proviso to tighten the legislation in this area.

I wish to refer to the amount of money that is being lost in this area. A survey conducted on the M50 on four dates between 2010 and 2011 on the M50, as mentioned by Senator Cáit Keane, showed that 5% of vehicles had no tax for at least a month. When those figures were followed up we did not see the same number of tax evasion cases coming forward. In 2012, the Garda witnessed more than 500,000 off-the-road vehicles. Yet when we look at the figures, they do not stack up. Something appears to be going on.

This takes me to the next issue, the certificate of destruction. As the issue was discussed in the other House, the Minister will be familiar with what I am talking about. In 2009 only 21,000 certificates of destruction were issued, while it is estimated that in the same year 150,000 cars were taken off the road. That means that approximately 130,000 vehicles are unaccounted for, some of which, as Senator Cáit Keane said, could be in Granny's shed or elsewhere, but they are certainly unaccounted for in the system. That is not good enough. We need to find out where these vehicles are. Are they the vehicles that young men and women buy for €50 each, drive for two or three days, abandon in forests and in some cases set on fire, or are they vehicles that are being broken up? It is clear from various Internet sites, when cars for sale are investigated, that three or four cars can make up one car. We need a system that can track down these vehicles. There is an opportunity here for the Minister to deal with that difficulty.

I welcome the fact that motor tax is not charged on vehicles in the stock of car dealers. There is another issue in respect of car dealers - that is, side-of-the-road car dealers who may have 12 or 15 cars on the grass verges of roads. I hope those people will be required to pay motor taxation on all of those cars, because they pay no rates and in some cases no income tax. I would like to see the Minister cracking down on those people. They are undercutting legitimate and compliant garages across the country and skirting the law. I hope the Minister will ensure specifically that they are not included in the provision whereby dealers in the trade do not have to pay motor taxation.

There is also the issue of fake tax discs. When the Garda requests a driver to stop, particularly in the evening, a flashlamp is shone on the tax disc and, if it appears to be in order, the driver is waved on. The Garda has no system to verify with the motor taxation office, which will eventually be the Road Safety Authority, whether a tax disc is legitimate. There is a need to examine that issue. Given modern technology, there should be a scanning device to ensure the discs are legitimate. I am aware from speaking with younger people who are technologically capable that they are able to make up discs and sell them on the black market. When the drivers are requested to stop at legitimate Garda checkpoints, following a cursory look, they get over the line. This is what is happening. The Minister is doing excellent work in this Bill but an adjunct is to ensure that everybody pays motor tax correctly in order that money can be provided to upgrade the roads.

Senator Kathryn Reilly

I welcome the Minister. I will keep my comments brief, as most of what I wanted to say has been covered. Like previous Senators, I welcome the Bill. I share some of the concerns highlighted. Non-payment of tax has been in the news recently, whether by multinational corporations taking advantage of specific loopholes in the tax code or by ordinary citizens taking advantage of loopholes in the current vehicle excise duty code. The net result is the same, as tax revenue is lost and the rest of us lose out. It is estimated that the amount of lost revenue from motor taxation is more than €50 million annually. To put that in perspective, that money would more than fund the roll-out of free GP care to 60,000 people on the long-term illness scheme. An extra €50 million would allow the Government to reverse the cuts to the mobility grants or the cuts to home help hours and home care packages in the budget. That is the human cost of tax evasion and the reason there is never an excuse for any kind of avoidance or evasion. Given the effects of recent budgets, every effort needs to be made to ensure due taxes are paid. Clearly there are significant problems with the current system of registering off-the-road vehicles and there is plenty of evidence that these have been exploited, the outcome of which has been that less money is available for road works, road improvements and road upgrades. The situation is particularly acute on secondary roads. Sometimes it is a case of "spot the road" as one tries to pothole-dodge on certain roads. Any increase in the level of compliance must be welcomed. One of the main areas of concern is that the Bill provides for a registration fee to be prescribed. I am aware the Minister has said he does not plan, at present, to prescribe a fee, but such a provision is unnecessary. I would like an assurance from the Minister that any extra revenue raised due to the changes contained in the Bill will be ring-fenced for local government funding, with a specific focus on road repair and upgrading.

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

Ba mhaith liom mo bhuíochas a ghabháil le gach duine a ghlac páirt sa díospóireacht seo. I wish to respond to some of the questions, and others can be responded to on Committee and Report Stages, which will be taken later.

The primary purpose of the Bill is to close off evasion. Tax evasion hurts the compliant. Failure to pay tax imposes a greater burden on all those who are compliant. The system which was intended to allow people who genuinely had a vehicle off the road to make a statement in a Garda station has been significantly abused. There were many calls to close this loophole and that is what is being done. I welcome the support of all Senators anseo. The measures are a key first step in addressing the recommendations set out in the Comptroller and Auditor General's report.

It is important to recognise that the action programme for effective local government is designed to strengthen and modernise the local government system. We are seeking to transfer new functions back to local authorities. This is an ongoing process. The most recent instance in this area is the creation of new local employment offices in local authorities. The Minister for the Environment, Community and Local Government, Deputy Phil Hogan, and the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, launched the first local employment office in Fingal last week.

In regard to damaged cars, the possibility of making an off-the-road declaration will apply to a car that is damaged and is being held at a garage for the sale of parts. At some stage, the car will need to be finally disposed of, and the rules in regard to the certificate of destruction will apply. A point was raised about end-of-life vehicles, but there is nothing in Bill that deals with that issue.

The Department has engaged consultants to undertake a review of producer responsibility. The report on the review which will be received in a couple of months is expected to make recommendations in a number of areas, including transparency with regard to end-of-life declarations. The Department of the Environment, Community and Local Government and the Department of Transport, Tourism and Sport are considering options for the measurement of evasion, including the feasibility of sharing data from traffic cameras as a tool for tackling motor tax evasion. The Department of Transport, Tourism and Sport is seeking legal advice on this matter. Traffic cameras are in place to manage road safety issues and have contributed significantly to the reduction in the loss of life and serious injuries. It is important not to impinge on the safety role of traffic cameras, but the deterrent effect on motor tax evasion could be very significant.

Senator Paschal Mooney made a number of points on the declaration of non-use. The declaration must be made in advance and can be made at any time in the month before tax or an existing declaration of non-use expires. There is no change to existing procedures for the renewal of motor tax and the month's grace is not affected by the Bill. I refer to the vintage speech - perhaps that is not the correct word-----

Senator Cáit Keane

The Minister of State is referring to the speech, not the person.

Deputy Fergus O'Dowd

Of course, as I want to make perfectly clear.

In the case of vintage cars, it will not be possible to avoid exemptions from the requirement to pay arrears on some categories of vehicles as the provision of exemptions for one group will inevitably lead to calls for other groups to be recognised. This legislation has been well flagged and there is effectively a four month period in which motorists can put their affairs in order. The proposed changes will be widely publicised in the coming months and this will include notification of the changes to the various elements of the motor trade.

On the question of a longer transition period, a three month transition period is seen as sufficient for status to be rectified. The steps required to make an off-the-road declaration are straightforward. We recognise that the Bill introduces an anti-evasion measure. Until the new system is in place, the existing evasion mechanism cannot be removed. Approximately €4 million per month is being lost to the Exchequer for each month of delay until the new system is in place. Extending the transition period would continue the loss to the State and lengthen the period of annoyance for the vast majority of compliant drivers.

The period of the off-the-road declaration is three to 12 months and modelled on the period for payments of motor tax. At the end of the period of validity of the off-the-road declaration, the vehicle owner will receive a reminder from the national vehicle driver file. The owner must then either renew the motor tax from the date of expiry or the off-the-road declaration. This will be a relatively simple procedure, not free but not excessively costly. It will tie in exactly with the existing system which allows for renewal by post. Providing for off-the-road declarations of indefinite duration could cause its own problems with vehicles reaching end of life. We must adhere to EU requirements on end-of-life vehicles. I refer to Senator Denis Landy's point about existing problems with improper practices in the recycling and destruction of vehicles. These would likely be worse if there was to be provision for an indefinite off-the-road declaration. There may be a number of cases where vehicles kept off the road for many years will be liable for arrears when being taxed in the future. This would not necessarily lead to their destruction, rather than renovation as vintage vehicles. If owners of such vehicles do not wish to pay arrears, they will continue to be able to display them at shows and drive them on private lands. The only restriction will be that they will not be permitted to drive them in a public place.

Senator Cáit Keane

They will need to be driven from A to B in order to bring them to a show.

Deputy Fergus O'Dowd

We recognise the need for a transition period to allow motorists the time to put their affairs in order.

Senator Sean D. Barrett raised the question of commercial and private users. The arrangements are straightforward and not designed to inconvenience compliant taxpayers. Those who need to take a vehicle off the road will be permitted to do so, but it will be necessary to notify the licensing authority in advance. They will not be required to have documents witnessed at a Garda station, nor will they be asked to provide a reason they wish to keep the vehicle off the road. In due course it will be possible to make a declaration online. A similar system has operated successfully in the United Kingdom for more than a decade and I expect it will operate equally successfully here. This will simplify the management of motor tax affairs for commercial users with variable levels of business. If a person's circumstances change during the period of the off-the-road declaration and he or she wishes to put the vehicle back on the road, this can be done by renewing the motor tax. This will be charged from the start of the then current month, which is the same approach as applied to those renewing motor tax in the month following expiry.

The provision in section 7 for charging an administrative fee provides that vehicles on which an annual tax of less than €119 is payable will be exempt from the administration fee when introduced. The current rate of tax on vintage cars is €57, which is a modest amount considering the car may be kept in a field or garden.

I thank Senator Sean D. Barrett for his point on the Short Title of the Bill. However, the Department has been advised that there is no need to amend the Short Title to include a reference to the amendments made to the Local Government Act 1998. The amendment to that Act is referred to in the Long Title. There is a distinction in function between the Short Title which allows an Act to be referred to in simple form and the Long Title which sets out more fully the purpose and scope of the Act. Legal advice is that the Short Title need not reflect accurately the entire content of an Act and that the Long Title is the preferred means of establishing legislative intent. The Minister is satisfied that the Short Title as laid before the House is adequate for its purpose and that there is no risk of any part of the Bill being successfully challenged on the basis of the wording of the Short Title.

In reply to Senator Denis Landy, it is not the intention to require individuals to produce documentary evidence that a vehicle will not be in use. It is not always the case that such evidence can be produced. For example, some individuals may simply decide that a vehicle will not be used during the summer months and may also choose not to insure it. Equally, vintage vehicles may not be in use while being repaired or refurbished. Furthermore, in the event that a person wishes to place a vehicle off the road for reasons of economy or financial difficulties, it would be very difficult to require him or her to expose his or her circumstances to the State in order to avoid paying a tax for which he or she would no longer be liable by virtue of leaving the vehicle off the road. Any system requiring documentary evidence of intent not to use a vehicle would be administratively very complex and costly. It should also be noted that if documentary proof were required that a vehicle would be off the road, it would not be possible for applicants to make an online declaration of non-use. It is intended to make the switch from the existing system as seamless and as simple as possible.

On the question of the link with the insurance, for a person to provide evidence that the insurance policy has been cancelled or put in abeyance, the risk would arise that a person would be tempted to take a car back on the road and drive without insurance and tax. There are significant associated safety issues with side of the road dealers. For example, one single car could be composed of parts from at least four other cars. These dealers will be required either to pay the motor tax due, as is the case, or else make an off-the-road declaration. A dealer established in the more usual way will be able to treat as stock-in-trade any car on the premises and will be exempt from the provisions of the Bill. The dealer on the side of the road will be liable because the cars are in a public place.

I take the point on the risk associated with high grade forgeries and dodgy discs which are fraudulently produced. A garda who is suspicious of such a vehicle can access information on tax status on the spot by inputting the registration number. I understand some Garda cars have equipment on board which can read vehicle registration plates.

The measures are all to do with roads maintenance. The Ministers, Deputies Phil Hogan and Leo Varadkar, have held discussions on the need for greater flexibility on expenditure allocated to projects. Local authorities already have discretion in the expenditure of certain funds but not all funds. The Minister for Transport, Tourism and Sport, Deputy Leo Varadkar has been in contact with the county managers' association to see what can be done to ensure a basic level of roads maintenance. It would be very helpful if increased funding was available as a result of everyone taxing his or her car.

The Bill provides for the charging of an administration fee through secondary legislation.

The Bill makes no provision for charging a premium over and above the reasonable cost. It cannot be penal; it must be the reasonable cost. If, or when, it is intended to apply the administration fee, we will calculate the actual cost of running the system and it will not be possible to charge more than this amount. I would like to give that assurance. It would not be unreasonable to apply the reasonable cost to those who will benefit from it by avoiding an obligation to pay motor tax or arrears. However, we recognise the importance of ensuring a smooth transition to the new system and it is not proposed to make changes at this stage.

Question put and agreed to.