Motor Tax Yield

Dáil Éireann Debate, Wednesday - 15 January 2014

Wednesday, 15 January 2014

Questions (521)

Brendan Griffin

Question:

521. Deputy Brendan Griffin asked the Minister for the Environment, Community and Local Government if he is concerned by dropping annual overall motor tax revenues; if he is concerned that the figures will continue to drop with more lower emission vehicles coming on the roads; his views that a reformed system of motor tax calculation is needed, in view of the fact that owners of older cheaper cars are paying multiples of what owners of new top of the range cars are paying; if he will consider moving entirely to a fuel consumption linked pay as you go system; if he will see the fairness merits of this as well as the administrative burden it would save; if he will consider the freedom such a system would give to State agencies to focus on anti-laundering and organised criminal activity in the fuel industry; and if he will make a statement on the matter. [1582/14]

Written answers

Minister for the Environment, Community and Local Government

Income from motor tax is kept under regular review, with rates and bands adjusted in a budgetary context as is deemed necessary.

It is not intended to seek to replace the current system of motor tax with additional taxation on motor fuel. Motor tax receipts for 2013 were in the order of €1.1bn. Maintenance of the tax base to that order would require an increase in fuel excise rates of at least 20 cent per litre, with direct negative impacts on the rate of inflation and economic competitiveness. Goods vehicles and other high usage and high mileage vehicles, such as public service vehicles and buses, would have higher costs under a pay-as-you-drive system. There would be other distributional effects, including on those with longer distances to commute.

An increase in fuel duty of this order could lead to an increase in cross-Border fuel purchasing, further depressing the tax base and requiring a compensatory adjustment, either in further increases in fuel prices or elsewhere in the tax system, to make up the shortfall. There is significant potential for an increase in fuel laundering and related organised criminal activity. The benefits of fuel based tax would have to be weighed against these issues, and many others, before the change proposed could be contemplated.