Dáil Éireann Debate, Thursday - 30 June 2016
117. Deputy Imelda Munster asked the Minister for the Environment, Community and Local Government if he will consider reviewing the motor taxation system with a view to looking at other models of payment such as incorporating payment into tax on fuel to enable road users to pay tax relative to their mileage and therefore level of use of their vehicle; and if he will make a statement on the matter. [18936/16]
View answerThere are no plans at present to replace the current system of motor tax with additional taxation on motor fuel or with any other mechanism.
Gross motor tax receipts for 2015 were in the order of €1.124 billion. Maintenance of the tax base 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 also be other distributional effects, including on those with longer distances to commute.
A significant increase in fuel duty 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. The potential for an increase in fuel laundering is also a risk.
The benefits of a fuel based motor tax system would have to be weighed against these considerations before the change proposed could be contemplated.
