Thank you, a Cheann Comhairle, for affording me the opportunity to raise this important matter, the cost to the State of scrapping old motor cars. There are approximately 218,000 cars over ten years old in this country. Because of the time given to section 171 of the Finance Act, 1995, there was not much time available to discuss other matters. Of particular interest to me is the payment of £1,000 in vehicle registration tax in respect of motor cars over ten years old which are scrapped and I congratulate the Minister for Finance for introducing it. The system becomes operational from the first day of next month and considerable interest in it has been expressed in my constituency and, I am sure, in other areas.
While I welcome the scheme as a forward thinking initiative by the Minister, I am sure it could be enhanced and developed further to achieve its primary objective, which is to get cars over ten years old off our roads and out of the system. The insurance statistics for some of these motor vehicles must be quite interesting — I will refer to this later.
The people in my constituency driving cars that are more than ten years old are not doing so because of a love of vintage cars. They are compelled to do so because of the high cost of purchasing new cars. A £1,000 refund will result in only some of these vehicles being sent to the scrap yard and replaced by new ones. If the scheme was relaxed slightly there would be a big increase in the numbers taking up the Minister's offer of financial aid, set out in section 97 of the Finance Act, 1995.
I propose the scheme should be adjusted so that a person can buy a car not more than two years old with not more than 30,000 miles on the clock and in addition being held by a granted owner for at least three years; the Finance Act mentions six months but that refers to a new car. In these cases there is no trade value.
The scrap value is taken as nominal in the following examples. A small new car costing £10,000 would cost £9,000. A small car two years old, depreciating by 20 per cent each year, would cost approximately £6,400 after two years; and net of the grant would cost £5,400. There is a self-evident, large difference between £9,000 for a new vehicle and £5,400 for a good second-hand vehicle. This would encourage more people to take up this scheme and take more old cars out of the system. The replacement cars, which would be more affordable, would also be much easier to insure and, therefore, the likelihood of uninsured vehicles on the road would be diminished considerably.
A further saving would be in the huge amount of Garda time spent in District Courts dealing with traffic offences such as bald tyres, defective steering, defective lights, exhaust emissions, etc. Apart from Garda time being better used in crime prevention and other important matters, other litigants would be able to get better access to the District Court. Accessibility to the courts is an integral part of any system of justice.
When cars of more than ten years old come off the road driving will be safer, not only for the drivers and passengers of such vehicles but for other road users and pedestrians. The new vehicle numbering system was introduced in 1987 and the huge number of vehicles with old style number plates makes clear how many vehicles are at least eight and a half years old.
A car is a vital part of the fabric of society, especially in rural areas where there is little availability of taxis. This was much discussed when the drink driving laws were altered and I admire the Minister for taking that initiative, even though he is a pioneer. In the country, people need cars to get to work, go to shops, take their children to places of education and visit the elderly, apart from pleasure purposes.
While my proposals would involve a great number of additional cars being scrapped the tangible cost of the £1,000 per vehicle would increase significantly. The benefits of reducing uninsured driving and saving Garda and court time, while real, are difficult to quantify. However, while these people in the main cannot afford new cars, in buying good used vehicles they will allow the better off motorist to buy new vehicles. This will have a much more dramatic effect on new car sales than the scheme originally proposed by the Minister, which still left a large financial gap between the scrap value of a car, which may be nothing, and the price of a new car.
Sales in the current year of both new cars and light vehicles of the type used by small businesses are only slightly up on 1994 at present and car sales dropped in May this year compared with May 1994. Despite the good economic statistics car sales have not achieved the peak of some years ago. An uplift in new car sales would benefit the Exchequer, through VRT more than anything else. The original scheme was described as revenue negative. Adopting those improvements to the Minister's good idea would mean more vehicle registration tax for the Exchequer, generating more funds; would free gardaí from District Court time; increase the number of insured vehicles; make the roads safer for all, by getting rid of poor vehicles; and make the car, a necessity in rural areas, accessible to more people.
