Tuesday, 1 April 2014

Questions (342, 345)

Peter Mathews

Question:

342. Deputy Peter Mathews asked the Minister for the Environment, Community and Local Government the reason for an increase in the total cost of motor tax when paying it quarterly as compared with paying it annually (details supplied); and if he will make a statement on the matter. [14932/14]

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Marcella Corcoran Kennedy

Question:

345. Deputy Marcella Corcoran Kennedy asked the Minister for the Environment, Community and Local Government the reason a percentage of the car size and capacity is calculated when purchasing motor car tax on a half-yearly and-or quarterly basis; the reason the administration charge varies in car capacity even though the administration work is the same for each transaction (details supplied); and if he will make a statement on the matter. [14692/14]

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Written answers (Question to Environment)

I propose to take Questions Nos. 345 and 342 together.

The Finance (Excise Duties) (Vehicles) Act 1952 provides that the rate of duty for a quarterly tax disc must not exceed 30% of the annual duty applicable and sets no upper limit for a half-yearly disc. The rates of duty currently applicable to the quarterly and half-yearly discs are 28.25 % and 55.5 % of the annual rate, respectively. These relativities have remained generally constant since the 1960s.

Non-annual transactions make up over two-thirds of all motor transactions processed. Tax rates for these vehicles take account of the extra workload for the National Vehicle and Driver File (NVDF) and motor tax offices, and the resultant higher administrative and printing costs. In addition, reminders are issued on each renewal. While costs may have reduced in respect of those paying on-line, they are not negligible. Moving from a system of setting the additional charge for quarterly and half-yearly payments as a percentage of tax payable to a flat fee would mean increases in overall costs for those paying lower rates of motor tax, and decreases in payments by those paying higher rates of tax, for the same quantum of tax collected. This could be regressive, for example in respect of those who can afford only to drive a smaller car compared to those who can afford to drive a larger car.

The annual income from the increased charges for three and six month discs in 2012 was over €50m. A loss in income from this source would have a negative impact on the Local Government Fund and consequently on grant allocations to local authorities from the Fund, and would have to be borne elsewhere in the motor tax system, or through the taxation system generally.