The disabled drivers' and disabled passengers' tax concessions scheme, which applies to certain persons with severe physical disabilities has been in operation since 1968. Its benefits have been considerably enhanced over the period and now involve the following.
There is relief in respect of vehicle registration tax, VRT, and value added tax, VAT, subject to the following maximum limits: €9,525 for a driver with a disability and €15,875 for a passenger, family member or organisation. Relief is available for a vehicle which has been specially constructed or adapted for use by a person with a disability and which has an engine size of less than 2,000cc in the case of a driver and 4,000cc in the case of a passenger or an organisation which represents persons with disabilities. The cost of the adaptation, in the case of a passenger, must amount to at least 10% of the cost of the vehicle exclusive of VRT. There is repayment of excise duty on fuel used in a vehicle for the transport of a person with a disability up to a maximum of 600 gallons or 2,728 litres per year. These limits are increased to 900 gallons and 4,092 litres for an organisation which represents persons with disabilities. There is exemption from annual road tax.
The benefits amount to over €5,250 on average per person per year. The scheme is not means-tested and the scale of benefits involved has created demand for the scheme to be extended to cover a much broader range of physical impairments. The scheme, excluding road tax, cost €36 million in 2003, compared with €5 million in 1994. The cost in 2004 of the scheme is expected to be €44 million.
An interdepartmental review group was convened to review the operation of the scheme. The terms of reference of the group were to examine the operation of the existing scheme, including the difficulties experienced by the various groups and individuals involved with it both on an administrative and user level, and to consider the feasibility of alternative schemes, with a view to assisting the Minister for Finance in determining the future direction of the scheme. The report of the interdepartmental review group on the disabled drivers' and disabled passengers', tax concessions, scheme made a number of recommendations for consideration by the Minister for Finance. In respect of the minimum period of retention of a vehicle, the report recommends that the minimum limits on the period of retention of a vehicle purchased under the scheme, and the frequency of renewal of a subsequent vehicle also purchased under the scheme, should be extended from two years to three years or, alternatively, the level of tax relief should be reduced in the case of second or subsequent applicants.
The basis for this recommendation is that the frequency of vehicle change is contributing to the ongoing steep rise in the cost of the scheme. The proportion of persons claiming every two years is at least 85%. The report highlights that the review group was not convinced by any evidence that vehicles used by persons with disabilities depreciate at a faster rate than other vehicles to the extent that they need to be replaced every two years. Moreover, the report highlights that a three-year warranty is standard for many makes of cars. Schemes in other countries were examined by the review group and indicate that tax relief or assistance on the purchase of a car is only available after three to seven years use of a vehicle.
Given the scale and scope of the scheme, changes can only be made after very careful consideration. For this reason, the Government decided in June this year that the Minister for Finance will consider the recommendations contained in the report of the interdepartmental review group in the context of the annual budgetary process having regard to the existing and prospective cost of the scheme.