It would never do for the Minister for Health and Children, Deputy Martin.
Financial Resolution No. 9: Excise – Vehicle Registration Tax.
(1) That as respects the remission or repayment of vehicle registration tax payable or paid on certain hybrid vehicles as provided for by subsection (1) of section 135C of the Finance Act, 1992 (inserted by section 168 of the Finance Act, 2001) is amended by substituting "31 December 2004" for "31 December 2002".
(2) It is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1927 (No. 7 of 1927).
Financial Resolution No. 7 provides, with effect from midnight tonight, for a increase in mineral oil tax on auto diesel which, when VAT is included, amounts to 3 cent on a litre. In addition, the resolution provides for a similar increase for substitute auto fuels to maintain parity with the rate for auto diesel. Following these increases Irish rates for auto fuels will still be below the EU average. The expected yield from these increases is approximately €52.5 million in a full year. The measure will increase the CPI by approximately 0.017%.
Financial Resolution No. 8 amends the structure of vehicle registration tax for private cars. The top rate of VRT, 30%, will apply to cars with an engine capacity exceeding 1900 cc. Until now, the rate only applied to cars with an engine capacity of 2001 cc and over. The cars affected will, therefore, move from the 25% VRT band to the 30% band.
The amended structure will come into effect from midnight on 31 December this year. The Exchequer yield from these increases is estimated at €30 million in a full year. It is estimated that these measures will increase the consumer price index by about 0.05%. This change is in line with the commitment in the programme for Government and the national climate change strategy for further rebalancing of VRT to favour more environmentally friendly cars.
Resolution No. 9 provides for the continuation to 31 December 2004 of the scheme whereby 50% of the vehicle registration tax payable or paid on certain hybrid electric motor vehicles may be remitted or repaid by the Revenue Commissioners. The scheme was introduced in the Finance Act, 2001, and was due to expire on 31 December 2002. A hybrid electric vehicle derives its locomotive power from a combination of an electric motor and an internal combustion engine. It is expected that €50,000 per annum will be repaid under the scheme.
The scheme is an incentive for the development of more environmentally friendly vehicles.
The Tánaiste would never open a few off-licences on that.
Golf carts for the Green Party.
I would never have got down there in one of those.
On the previous occasion when the Minister for Finance introduced this measure, I remember "Morning Ireland" asked me to test drive one of these hybrid cars. The problem is that they are so expensive.
If the Minister was talking about fulfilling the Kyoto Protocol and combating climate change, he should have really grasped the nettle and introduced a carbon tax. We are only tinkering around the edges with the measures in this resolution. Liquid petroleum gas is still to be included despite the fact that it is a relatively clean fuel. There have been suggestions that the taxi fleet or the buses in Dublin city could run on LPG. The Tánaiste introduced the measures as environmentally friendly but they are window dressing.
The Government does not understand the way climate change will affect future generations. It is undoubtedly the greatest challenge humanity faces. I hear people talking about global terrorism but it is nothing compared with global warming and the devastating effects it will have this century. The Government appears oblivious to this. I saw a picture of the Taoiseach standing in the floods in Drumcondra wearing wellingtons and a peculiar hat and with an even more peculiar expression on his face.
Bewildered.
I do not see in these measures a real response to the question of climate change. The Tánaiste should not be so disingenuous. A committee is to examine this area but we already know from the ESRI and others that the unilateral application of a carbon tax can be effective. Are we still going to ignore all the evidence? The Minister for Justice, Equality and Law Reform, my constituency colleague, opposes the harmonisation of taxes. Does it not make sense to have such harmonisation in energy taxes?
It does for VRT.
This is a trans-boundary phenomenon and we should examine and tackle the problems we face as a country and which the planet faces. The problem is that the Government lacks vision.
I wish to deal with the increase in diesel of 3 cent per litre. I would like to think that the Minister for Finance does not realise the effects this will have on rural communities. I wish to speak about the fishing industry and the margin of economic survival, especially for inshore fishermen who take enormous risks to maintain a tradition of life as well as trying to keep alive the vibrancy of their communities.
I estimate that this increase in diesel will add €2,000 to €2,500 per year to these fishermen's running costs, and that is for smaller boats. Given the amount of suffering and losses the sea takes on a yearly basis, much of which happens because fishermen cut corners because of their economic position and their determination to remain involved in fishing, this added burden will create enormous hardship and difficulties for people involved in the fishing industry. I do not know if this measure can be reversed but what I have said should be considered.
The buzz words doing the rounds at present concern rural development and regeneration and trying to maintain traditional values in rural areas. The population of most rural areas is declining and the family farm has been eroded. This extra burden being placed on rural communities will affect the farming community, especially small farmers who are trying to survive, as well as contractors involved in farms and road hauliers. This increase in the price of diesel will undoubtedly create further difficulties for people trying to survive in rural areas.
The knock-on effect of the increase on road hauliers will be a greater cost for transporting goods throughout the country and this will affect people dependent on the hauliers to transport their goods throughout the country. The farming community, especially small farmers, will suffer from this increase. There is also the additional pressure of an increase in VAT.
I hope the Minister takes this into account. What he has done is a terrible mistake. I disagree with most of the budget. In this instance, he has done a terrible disservice to people who are trying hard to survive in rural areas.
The increase in transport costs brought about by the increase in the cost of diesel and the increase in VRT will have a negative impact on jobs as the year progresses. I do not know how the motor industry will greet the VRT provision but I have a good idea. It is concerned about it, because a dip in the economy generally results in a dip in the motor industry economy. The increase in VRT will have a negative effect and there will be job losses as a result.
The increase in transport costs will be passed on to consumers throughout the country. This in turn will have a negative impact on the economy and inflation and will affect everyone because they will have to pay for the increase in transport costs which will automatically follow from the increase in the price of diesel.
Diesel compares much more favourably with petrol on ecological and environmental grounds. Modern diesel engines have been perfected to the extent that the impact of their emissions is minimal in comparison with petrol engines. The increase in the cost of diesel will have a negative effect. It is a ready and easy means of raising revenue but the negative effect will impact on every person in the country in terms of transport and the motor industry.
Can the Deputy suggest an alternative?
If I were over there in the Minister's seat, I would be delighted to suggest alternatives and the sooner that comes about the better for people.
I do not mind the Deputy ducking the question.
I noticed the tour de force of the Minister for Justice, Equality and Law Reform in relation to various Departments in recent times. This is to be applauded and we encourage this sort of thing.
We call it joined-up Government.
In the kind of adversarial political system we have, it is possible to overdo that kind of thing. From the point of view of normal political health, I would not encourage it too much.
The Deputy is just a bit jealous.
Jealousy is a characteristic I do not entertain.
Envy perhaps.
Not envy in this situation either. In this area, these provisions will have a negative impact and the Government should recognise this.
I would like to follow up on Deputy Durkan's remarks on the impact of a 3 cent per litre increase. He is suggesting that if this is passed on through business, it will eventually impact on inflation. It is a revenue generating measure. Deputy Durkan was asked to suggest an alternative to raise this money. I believe it is a fair and equitable measure and is not excessive in relation to the current cost of diesel. Deputy Durkan spoke of the added cost to business. The 3 cent per litre already includes VAT, which businesses do not have to pay. Anybody running a business with transportation costs knows the price of diesel will fluctuate during the year due to other factors such as the strength of the euro, which has been favourable recently, and the price of oil on the world market. I view the 3 cent per litre as a balanced figure.
I listened to the comments of Deputy Ferris in relation to the fishing industry. Although I am not acquainted with that industry, I had understood that diesel for agriculture was at a preferential rate anyhow.
This represents a further cost on industry. I live in the Border area and have seen such taxation changes from time to time. At the present, those who are operating legitimate businesses selling diesel are having a more balanced time. I question whether enough is being done to control the legitimate, as opposed to the illegitimate, use of diesel. There is an enormous problem. People are getting rich very quickly through that by whatever means. If more effort was put into addressing that, this charge might not have been needed.
The haulage business here is under extreme pressure. The Tánaiste is charged with responsibility for insurance. Many lorry drivers are under extraordinary pressure to maintain their businesses against competition elsewhere. The Exchequer take from this charge will come largely from that industry. It is 14 cent per gallon, a very significant amount for somebody filling a lorry to travel across Europe.
My county is heavily involved in poultry, pigs and mushrooms, which all need significant road transport. We do not have a rail line and have no other means of transport. We also have poor roads. I accept that revenue needs to be raised through some means, but road transport is very important in this country.
I have a personal interest in that I have a diesel car, but my concerns are not based on that. That will make some difference but it will be negligible compared to the hard pressed transport businesses. Many bus and haulage companies are under pressure and some have already gone out of business.
On this side of the House, we provide a Government and some people say we provide the Opposition from our backbenches.
They are just shadow boxing.
Opposition on the plinth, but not here.
We also provide the green and environmental section, because of the vacuum created in this Chamber by the other parties.
The vacuum will be shown later tonight.
This measure is for environmental and green reasons, as the Tánaiste said when she moved the motion. I support the increase to 30% in VRT for cars between 1900 cc and 2000 cc. I often wondered why there are so many cars that are 1995 cc and 1998 cc. I only found out today that it was to avoid VRT.
It is amazing what one discovers in a budget.
I agree with the Deputy and I am sure he has learned much today of the benefits that are to be derived from a good budget. I expect the car manufacturers will start to introduce cars of 1895 cc and 1898 cc very soon and that is not a bad thing.
They reflect on little else in Tokyo, but what we are thinking in Dublin about VRT.
This measure will effect an overall reduction in the engine size that car buyers will seek, because a difference of 5% in VRT is fairly significant. It will encourage all car users, particularly those buying cars in the region of a two litre engine, to buy cars with smaller engines.
We cannot all buy small cars.
I have sympathy particularly for the rural Deputies, because they need cars with sizeable engines to make the journey up to the Dáil and home again as well as travelling around some of their widespread constituencies.
This is for the citizenry at large, not for Members of the Dáil.
It does not affect Deputy Rabbitte in his Dublin constituency as much as it affects rural Deputies. They understand what I am talking about. The urban and rural divide is so strong that it might be wise if he cooled it a bit on this one.
Is everything rural outside Dublin?
Deputy Gormley mentioned the energy tax and our international obligations in relation thereto. We recently saw the floods on the north side of the city and around Ringsend in the constituency of the Minister for Justice, Equality and Law Reform. Ireland and all countries in the world have the responsibility to do something in relation to global warming in general. I am delighted to note the determination to introduce a carbon energy tax from the end of 2004.
The proposal to increase the excise duty on road diesel will have a significant effect on the many people who use diesel engines in their personal transport arrangements. I concur with the point made in relation to the transport industry which is the area that will affect every one of us. It is not only the Cavan-Monaghan constituency and other constituencies of similar infrastructural neglect which are totally dependent on road deliveries for all services and goods. One will find that the 3 cent increase in diesel will have a domino effect in terms of the overall cost of all goods and services that each of us will use. There is no question that it will be absorbed by an industry that is already hard pressed to make ends meet. It will have to be passed on and, again, it will be passed on to the people who are affected by each and every negative measure inbuilt in the budget on whom it will have a damaging effect.
It will further damage the Border areas, in particular, where for many years the traffic moved entirely from south to north in terms of access to petrol and diesel. In recent years the flow has been the other way around, which is very welcome and has given a fillip to the economic life and condition of Border counties. However, the proposed increase will put at risk this North-South traffic which is so important in sustaining the economy. In the town of Clones, for example, where there was not a petrol or diesel filling station for many years, these opportunities have only opened up again in recent years.
Thanks to the Fianna Fáil Party.
It is critically important that people recognise that any increase that will upset that bias towards the retail outlets for motor fuels south of the Border will have an adverse effect in terms of the overall economic reality of the community.
In relation to the vehicle registration tax, the motor industry, which gives employment to so many in this country, will be deeply disappointed that the Government has chosen to increase VRT in certain categories. This is a further penalty and disincentive and will undoubtedly have a very damaging effect on what is a fluid market. The failure of the Government lies not only in the damaging effect of what it included but also its failure to take on board the argument from the Society of the Irish Motor Industry that a full refund of VRT for re-exported cars should have been introduced. For those Members from other parts of the country who may not understand the position, in constituencies such as mine and others in the Border counties, there has been and will continue to be a significant number of purchases of vehicles north of the Border. We live within a few miles of the Border. This type of trade means the importation of cars from north of the Border on which VRT is paid here. Given the reality that our communities do not stop at the Border but encompass a hinterland that straddles it, these cars are subsequently resold to people north of the Border. Individuals and dealers, in particular, should have the right and opportunity to reclaim the VRT in order that they can compete on a level playing field with their competitors just a short number of miles away north of the Border.
Not only has the Government adversely affected the motor industry by this measure but it has failed to take on board the very fair and logical arguments put forward by SIMI this year and in previous years. This amounts to a double whammy to the motor industry and the many people who depend on it for their livelihood.
I wish to respond to some of the points made. In relation to the excise rate which applies in Ireland compared to other European Union countries, it is 30 cent per litre here, 74 cent per litre in the United Kingdom and 44 cent per litre in Germany, with the European Union average some 35 cent per litre. Therefore, the rate here is well below the European Union average. Even after the 3 cent increase, diesel is still 3 cent cheaper per litre here than in Northern Ireland. As there is no change in the special rate that applies to public transport and school buses they will not be affected by the increase.
Deputy Gormley suggested we should have lowered the rate of excise on LPG. The European Union applies a minimum rate for LPG. As we currently apply the minimum rate, we have no scope to reduce it.
The Minister commented on the issue of carbon tax in the Budget Statement. Emissions trading will be introduced in the European Union in 2005. Many of our companies are preparing for the advent of this trading and are spending considerable resources on moving to alternative sources of energy. The competitiveness of Irish industry was mentioned in the previous two motions. The Opposition was united in opposing the Government for increasing stamp duty on commercial transactions. If we had unilaterally decided to go down the road of carbon taxes, vulnerable industries here would have been put at risk. For example, such taxes would add some €10 million to the overall cost base of a specific company which employs several hundred people in a peripheral location here. The approach taken by the Government in today's budget is a reasonable one which will deliver the results.
While there were no positives in the closure of IFI, one beneficial result, if it can be so described, was that the closure will enable us to meet some of our carbon emission targets more readily, certainly in terms of the proportion allocated to the industrial sector. IFI was a major producer of carbon emissions to the tune of something in the region of two million tonnes per annum.
We should encourage people to move to smaller cars for all the reasons mentioned earlier.
Does the Minister plan to change her car?
I have recently changed to a smaller car. However, I do not know the cc of its engine. We have not increased excise on petrol for a host of reasons, mainly so many people require their cars to go to work and its potential impact on the consumer price index. As I stated earlier, the impact of the increase in the price of diesel will be 0.017%.
I commend the resolutions to the House. There are environmental and competitiveness reasons for the measures and reasons related to the CPI and tax raising. Although the Opposition opposed all the tax raising measures in this budget, it has not proposed a single alternative for raising the revenue we need to run the country for the next year.
As the time permitted for this debate has elapsed, I am required to put the following question in accordance with an order of the Dáil of this day.
Question put: "That Financial Resolutions Nos. 7 to 9, inclusive, be agreed to."
Tá
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Ahern, Dermot.Ahern, Michael.Ahern, Noel.Andrews, Barry.Ardagh, Seán.Aylward, Liam.Blaney, Niall.Brady, Johnny.Brady, Martin.Brennan, Séamus.Browne, John.Callanan, Joe.Callely, Ivor.Carey, Pat.Carty, John.Cassidy, Donie.Collins, Michael.Coughlan, Mary.Cowen, Brian.Cregan, John.Cullen, Martin.Curran, John.Davern, Noel.de Valera, Síle.Dempsey, Noel.Dempsey, Tony.Dennehy, John.Devins, Jimmy.Ellis, John.Fahey, Frank.Finneran, Michael.Fitzpatrick, Dermot.Fleming, Seán.Gallagher, Pat The Cope.Glennon, Jim.Grealish, Noel. |
Hanafin, Mary.Harney, Mary.Haughey, Seán.Jacob, Joe.Keaveney, Cecilia.Kelleher, Billy.Kelly, Peter.Killeen, Tony.Kirk, Seamus.Kitt, Tom.Lenihan, Brian.Lenihan, Conor.McDaid, James.McDowell, Michael.McEllistrim, Thomas.McGuinness, John.Martin, Micheál.Moloney, John.Moynihan, Donal.Moynihan, Michael.Nolan, M. J.Ó Cuív, Éamon.Ó Fearghaíl, Seán.O'Connor, Charlie.O'Dea, Willie.O'Donnell, Liz.O'Donoghue, John.O'Donovan, Denis.O'Flynn, Noel.O'Keeffe, Batt.O'Keeffe, Ned.O'Malley, Fiona.O'Malley, Tim.Parlon, Tom.Power, Peter. Power, Seán. |
Tá–continued
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Roche, Dick.Ryan, Eoin.Sexton, Mae.Smith, Brendan.Smith, Michael.Treacy, Noel. |
Wallace, Dan.Wallace, Mary.Walsh, Joe.Wilkinson, Ollie.Woods, Michael.Wright, G. V. |
Níl
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Allen, Bernard.Boyle, Dan.Breen, James.Breen, Pat.Broughan, Thomas P.Burton, Joan.Connaughton, Paul.Connolly, Paudge.Costello, Joe.Crawford, Seymour.Cuffe, Ciarán.Deenihan, Jimmy.Durkan, Bernard J.English, Damien.Enright, Olwyn.Ferris, Martin.Gilmore, Eamon.Gormley, John.Harkin, Marian.Hayes, Tom.Healy, Seamus.Higgins, Joe.Higgins, Michael D.Howlin, Brendan.Kehoe, Paul.Lynch, Kathleen.McCormack, Padraic.McGinley, Dinny. |
McGrath, Paul.McHugh, Paddy.McManus, Liz.Mitchell, Olivia.Morgan, Arthur.Moynihan-Cronin, Breeda.Murphy, Gerard.Neville, Dan.Noonan, Michael.Ó Caoláin, Caoimhghín.Ó Snodaigh, Aengus.O'Dowd, Fergus.O'Shea, Brian.Pattison, Seamus.Penrose, Willie.Perry, John.Quinn, Ruairi.Rabbitte, Pat.Ring, Michael.Ryan, Eamon.Ryan, Seán.Sherlock, Joe.Shortall, Róisín.Stagg, Emmet.Timmins, Billy.Upton, Mary.Wall, Jack. |
Tellers: Tá, Deputies Hanafin and Kelleher; Níl, Deputies Durkan and Stagg.
Question declared carried.