Dáil Éireann díospóireacht -
Thursday, 12 Dec 2002

Vol. 559 No. 3

Financial Resolutions 2002. Excise Duties on Mechanically Propelled Vehicles.

Minister for the Environment and Local Government (Mr. Cullen)

I move:

"(1) THAT in this Resolution–

‘Act of 1952' means the Finance (Excise Duties)(Vehicles) Act, 1952 (No. 24 of 1952);

‘Act of 1992' means the Finance (No. 2) Act, 1992 (No. 28 of 1992);

‘Act of 2001' means the Motor Vehicle (Duties and Licences ) Act, 2001 (No. 22 of 2001).

(2) That the Act of 1952 (as amended by section 3(2) of, and the Schedule to, the Act of 2001) shall, as respects licences under section 1 of that Act taken out for periods beginning on or after 1 January 2003, be amended in Part 1 of the Schedule to the Act of 1952 by substituting the following for paragraphs 1 to 6:

‘1. Vehicles of the following descriptions not exceeding 500 kilograms in weight unladen:

(a) bicycles (other than bicycles which are electrically propelled), or tricycles (other than tricycles neither constructed nor adapted for use nor used for the carriage of a passenger), of which the cylinder capacity of the engine–

(i) does not exceed 75 cubic centimetres €35

(ii) exceeds 75 cubic centimetres but does not exceed 200 cubic centimetres €49

(iii) exceeds 200 cubic centimetres €64

(b) bicycles or tricycles which are electrically propelled €30

(c) vehicles with three or more wheels neither constructed nor adapted for use nor used for the carriage of a driver or passenger €64.

2. (a) Vehicles (commonly known as dumpers) not exceeding 3 metres cubed in capacity, level loaded, designed and constructed for use on sites of construction works (including road construction and house and other building works) for the purpose of conveying oncrete, rubble, earth or other like material where the person taking out the licence shows to the satisfaction of the licensing authority that the vehicle is used mainly on such sites, and on public roads only–

(i) for the purpose of proceeding to and from the site where it is to be used, and when so proceeding neither carries nor hauls any load other than such as is necessary for its propulsion or equipment, or

(ii) for the purpose of conveying concrete, rubble, earth or like material for a distance of not more than one kilometre to and from any such site €74

(b) Vehicles (commonly known as off-road dumpers) exceeding 3 metres cubed in capacity, level loaded, designed and constructed primarily for use on sites of construction works (including road construction and house and other building works) for the purpose of conveying concrete, rubble, earth or other like material and incapable by reason of their design and construction of exceeding a speed of 55 kilometres per hour on a level road under their own power and which are the subject of special permits under article 17 of the Road Traffic (Construction, Equipment and Use of Vehicles) Regulations, 1963 (S.I. No. 190 of 1963) €641

(c) Any vehicle (other than a vehicle constructed or adapted for use and used for the conveyance of a machine, workshop, contrivance or implement, by or in which goods being conveyed by such vehicle are processed or manufactured while the vehicle is in motion) constructed or adapted for use and used only for the conveyance of a machine, workshop, contrivance or implement (being a machine, workshop, contrivance or implement which is built in as part of the vehicle or otherwise permanently attached thereto) and no other load except articles used in connection with such machine, workshop, contrivance or implement or goods processed or manufactured therein including any vehicle (commonly known as a recovery vehicle) constructed or permanently adapted for the purposes of lifting, towing and transporting a disabled vehicle or for any one or more of those purposes €241

(d) Vehicles (commonly know as forklift trucks) designed and constructed for the purpose of loading and unloading goods where the person taking out the licence shows to the satisfaction of the licensing authority that the vehicle is used on public roads only–

(i) for the purpose of proceeding to and from the site where it is to be used for loading and unloading, and when so proceeding neither carries nor hauls any load other than such as is necessary for its propulsion or equipment, or

(ii) as part of the process of loading or unloading, for the purpose of conveying goods for a distance of not more than one kilometre to and from the site where it is loading or unloading €74.

3. (a) Vehicles constructed or adapted for the carriage of more than 8 persons which are owned by a youth or community organisation and which are used exclusively by the organisation solely for the purpose of conveying persons on journeys directly related to the activities of the organisation and which have seating capacity for–

(i) more than 8 persons but not more than 20 persons €111

(ii) more than 20 persons but not more than 40 persons €146

(iii) more than 40 persons but not more than 60 persons €292

(iv) more than 60 persons €292

(b) Vehicles (other than those referred to in subparagraph (c) of this paragraph) used as large public service vehicles within the meaning of the Road Traffic Act, 1961, and having seating capacity for–

(i) more than 8 persons but not more than 20 persons €111

(ii) more than 20 persons but not more than 40 persons €146

(iii) more than 40 persons but not more than 60 persons €292

(iv) more than 60 persons €292

(c) Vehicles which are large public service vehicles within the meaning of the Road Traffic Act, 1961, and which are used only for the carriage of children, or children and teachers, being carried to or from school or to or from school-related physical education activities, and are either licensed under Article 60 of the Road Traffic (Public Service Vehicles) Regulations, 1963 (S.I. No. 191 of 1963) as amended, or owned or operated by a statutory transport undertaking €69.

4. Vehicles of the following descriptions:

(a) vehicles designed, constructed and used for the purpose of trench digging or any kind of excavating or shovelling work which–

(i) are used on public roads only for that purpose or the purpose of proceeding to and from the place where they are to be used for that purpose, and

(ii) when so proceeding neither carry nor haul any load other than such as is necessary for their propulsion or equipment €74

(b) tractors (being tractors designed and constructed primarily for use otherwise than on roads and incapable by reason of their construction of exceeding a speed of 50 kilometres per hour on a level road under their own power) and agricultural engines, not being tractors or engines used for hauling on roads any objects except their own necessary gear, threshing appliances, farming implements or supplies of fuel or water required for the purposes of the vehicles or agricultural purposes €74

(c) tractors (being tractors designed and constructed primarily for use otherwise than on roads and incapable by reason of their construction of exceeding a speed of 50 kilometres per hour on a level road under their own power and not being tractors in respect of which a duty is chargeable at the rate specified in subparagraph (b) of this paragraph) which are used for haulage in connection with agriculture and for no other purpose €74

Where a tractor is fitted with a detachable platform, container or implement (being a platform, container or implement used primarily for farm work), goods or burden of any other description conveyed on or in the platform, container or implement shall be regarded for the purposes of this subparagraph as being hauled by the tractor,

(d) tractors of any other description €241

(e) motor caravans, being vehicles which are shown to the satisfaction of the Revenue Commissioners to be designed, constructed or adapted to provide temporary living accommodation which has an interior height of not less than 1.8 metres when measured in such manner as may be approved by the Revenue Commissioners and, in respect of which vehicles, such design, construction or adaptation incorporates the following permanently fitted equipment–

(i) a sink unit,

(ii) cooking equipment of not less than a hob with 2 rings or such other cooking equipment as may be prescribed, and

(iii) any other equipment or fittings as may be prescribed €74

(f) vehicles which are kept and used exclusively on an offshore island to which there is no direct road or bridge access from the mainland €74.

5. Vehicles (including tricycles weighing more than 500 kilograms unladen) constructed or adapted for use and used for the conveyance of goods or burden of any other description in the course of trade or business (including agriculture and the performance by a local or public authority of its functions) and vehicles constructed or adapted for use and used for the conveyance of a machine, workshop, contrivance or implement by or in which goods being conveyed by such vehicles are processed or manufactured while the vehicles are in motion:

(a) being vehicles which are electrically propelled and which do not exceed 1,500 kilograms in weight unladen €76

(b) being vehicles which are not such electrically propelled vehicles as aforesaid and which have a weight unladen–

(i) not exceeding 3,000 kilograms €241

(ii) exceeding 3,000 kilograms but not exceeding 4,000 kilograms €305

(iii) exceeding 4,000 kilograms but not exceeding 5,000 kilograms €393

(iv) exceeding 5,000 kilograms but not exceeding 6,000 kilograms €545

(v) exceeding 6,000 kilograms but not exceeding 7,000 kilograms €737

(vi) exceeding 7,000 kilograms but not exceeding 8,000 kilograms €928

(vii) exceeding 8,000 kilograms but not exceeding 20,000 kilograms €928 plus €218 for each 1,000 kilograms or part thereof in excess of 8,000 kilograms

(viii) exceeding 20,000 kilograms €3,760.

6. Vehicles other than those charged with duty under the foregoing provisions of this Part of this Schedule:

(a) any vehicle which is used as a hearse and for no other purpose €74

(b) any vehicle (excluding a taxi) which is used as a small public service vehicle within the meaning of the Road Traffic Act, 1961, and for no other purpose €69

(c) any vehicle which is fitted with a taximeter and is lawfully used as a street service vehicle within the meaning of the Road Traffic Act, 1961, and for purposes incidental to such use and for no other purpose €69

(d) other vehicles to which this paragraph applies and which have an engine capacity–

(i) not exceeding 1,000 cubic centimetres €144

(ii) exceeding 1,000 cubic centimetres but not exceeding 1,100 cubic centimetres €216

(iii) exceeding 1,100 cubic centimetres but not exceeding 1,200 cubic centimetres €239

(iv) exceeding 1,200 cubic centimetres but not exceeding 1,300 cubic centimetres €259

(v) exceeding 1,300 cubic centimetres but not exceeding 1,400 cubic centimetres €278

(vi) exceeding 1,400 cubic centimetres but not exceeding 1,500 cubic centimetres €298

(vii) exceeding 1,500 cubic centimetres but not exceeding 1,600 cubic centimetres €372

(viii) exceeding 1,600 cubic centimetres but not exceeding 1,700 cubic centimetres €394

(ix) exceeding 1,700 cubic centimetres but not exceeding 1,800 cubic centimetres €461

(x) exceeding 1,800 cubic centimetres but not exceeding 1,900 cubic centimetres €487

(xi) exceeding 1,900 cubic centimetres but not exceeding 2,000 cubic centimetres €513

(xii) exceeding 2,000 cubic centimetres but not exceeding 2,100 cubic centimetres €656

(xiii) exceeding 2,100 cubic centimetres but not exceeding 2,200 cubic centimetres €688

(xiv) exceeding 2,200 cubic centimetres but not exceeding 2,300 cubic centimetres €719

(xv) exceeding 2,300 cubic centimetres but not exceeding 2,400 cubic centimetres €749

(xvi) exceeding 2,400 cubic centimetres but not exceeding 2,500 cubic centimetres €782

(xvii) exceeding 2,500 cubic centimetres but not exceeding 2,600 cubic centimetres €915

(xviii) exceeding 2,600 cubic centimetres but not exceeding 2,700 cubic centimetres €951

(xix) exceeding 2,700 cubic centimetres but not exceeding 2,800 cubic centimetres €984

(xx) exceeding 2,800 cubic centimetres but not exceeding 2,900 cubic centimetres €1,020

(xxi) exceeding 2,900 cubic centimetres but not exceeding 3,000 cubic centimetres €1,056

(xxii) exceeding 3,000 cubic centimetres €1,279

(xxiii) electrically propelled €139.'.

(3) That the Act of 1952 shall, as respects licences under section 1 of that Act taken out for periods beginning on or after 1 January, 2003, be amended by substituting the following for paragraph 5 of Part II of the Schedule (as amended by section 3(3) of the Act of 2001):

‘5. Where the applicant for a licence under section 1 of this Act satisfies the licensing authority that the vehicle in respect of which the licence is sought was constructed more than 30 years prior to the commencement of the period in respect of which the licence is sought the annual rate of duty shall, notwithstanding Part 1 of this Schedule, be–

(i) €18 where, apart from this paragraph, paragraph 1 of Part 1 of this Schedule would apply to the vehicle, and

(ii) €40 in respect of any other vehicle.'.

(4) That the Act of 1992 shall, as respects licences under subsection (3) of section 21 of that Act (as amended by section 4 of the Act of 2001) taken out for periods beginning on or after 1 January, 2003, be amended by substituting the following for that subsection:

‘(3) (a) There shall be charged, levied and paid on a trade licence a duty of excise of–

(i) in the case of a licence for exhibition only on a motor-cycle, €43,

(ii) in the case of a licence for exhibition only on any other vehicle, €255.

(b) There shall be charged, levied and paid on a trade licence issued in place of a trade licence that has been lost, stolen or destroyed, a duty of excise of–

(i) in the case of a licence for exhibition only on a motor-cycle, €28,

(ii) in the case of a licence for exhibition only on any other vehicle, €62.'.

(5) 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).".

This Resolution provides for amendment of the Finance (Excise Duties) (Vehicles) Act, 1952 and the Finance (No. 2) Act 1992, as extended by the Motor Vehicle (Duties and Licences) Act, 2001, in relation to rates of motor tax and fees for trade licence plates. The House will be aware that notice of the intention to change motor tax rates was given in a recent press notice. A 12% increase for all vehicles and trade plate licences is proposed.

I should make it clear that motor taxation is not paid into the Exchequer. Rather, it is paid directly into the local government fund. This fund which was established under the Local Government Act, 1998 is ringfenced in law for the specific purpose of local government and cannot be used by the Exchequer for other purposes. It is financed from the proceeds of motor taxation and is supplemented by an Exchequer contribution. The fund is used to finance non-national roads and the general purpose needs of local authorities.

In 2002, local authority current expenditure will amount to about €3.2 billion. This expenditure will be funded from a variety of sources including income from commercial rates, charges and fees for services provided, a range of specific Government grants and general purpose grants from the local government fund.

In 2002, the local government fund will contribute about €987 million or 31% of all current income. This is made up of general purpose grants of €593 million and non-national road grants of €394 million. As Minister for the Environment and Local Government, I am concerned to ensure the viability and well-being of local government. This concern does not arise simply because of my position as Minister, but also at a personal level. My background is in local government. I believe in the local government system and I believe that it should play a central and meaningful role in the lives of all citizens, the length and breath of this country. While clearly local government must complement central government, it must maintain independence and be accountable separately from central government.

To be of relevance, have an impact and do things, local authorities must have adequate resources at their disposal. I do not want to simply pay lipservice to the local government system. I want, and I intend, that local government will have a fair and reasonable level of resources available to it to carry out its functions in an effective and efficient manner. In particular, in the context of today's debate, I want local authorities to have the resources to maintain and develop our non-national roads system. That is why I propose to increase rates of motor tax.

As in all organisations and sectors of the economy, local authorities must continually seek to identify ways of delivering services in a more cost efficient manner wherever and whenever possible. In addition, authorities must always, and particularly at this time, carefully consider their expenditure plans and expenditure priorities having regard to the income available to them. However, even after seeking out efficiencies and pruning back expenditure where necessary, there is no getting away from the fact that to continue to provide good quality services to the public and to develop the non-national roads network, the local government system will need extra resources next year.

The national development plan provides for investment of €2.43 billion in the non-national road network in 2000-2006. Of this, €1.08 billion is scheduled for the BMW region and €1.35 billion for the southern and eastern region. The BMW region accounts for 40,500 kilometres of the network, that is 45% of the total network. Given the predominantly rural character of this region, I am sure this House will readily agree that non-national roads play a very important role in its economic and social life and must be continually maintained and developed. The very viability and future of the region depends to a large extent on having a good non-national road network.

The southern and eastern region accounts for some 50,000 kilometres of the non-national road network. While considerable economic growth has been achieved throughout the southern and eastern region over the period of the last development plan, much of this growth has been centred predominantly around the region's four main cities and the larger urban centres. This has led to capacity constraints in these areas, while at the same time the more remote rural sub-regions have suffered from the negative effects of peripherality and isolation. Investment in non-national roads in 2000-2006 will improve access to the remoter locations in this region, promote them as places in which to live, work, establish enterprises and improve the quality of life for resident communities.

The restoration programme accounts for about half of the non-national road State grants each year. This programme was introduced in 1995 to restore regional and local roads which had become deficient through under-investment by successive Governments. A pavement condition study carried out in 1996 identified that over 47,000 kilometres of the non-national road network was deficient at that time. The success of this Government in the area of non-national roads can be gauged by the fact that by the end of this year over 29,000 kilometres or 62.31% of the deficient network will have been restored to good condition. This is real progress. It was the setting up of the local government fund that facilitated this progress. It is as a consequence of channelling motor tax receipts into the local government fund that a link has been created between the amount of tax paid by motorists and the visible and concrete service they get for that tax in terms of better roads and better local government services.

The new rates of motor tax set out in the financial resolution will apply to tax discs and trade licences taken out for periods beginning on or after 1 January 2003. A standard across the board 12% increase is proposed. The new rates for all vehicles are set out in the printed financial resolution and rather than read them and take up the limited time we have available, I would like to highlight for the House just a few details of the proposed changes in relation to private cars and goods vehicles which make up 91% of the national fleet.

For the lowest engine size car of under 1000cc, the annual rate increase is €15, an increase of 29 cent a week. For cars in the 1001cc to 1300cc, the annual increase is between €23 and €28. For cars in the 1300cc to 1400cc range, the additional annual increase is €30. Sixty percent of the national car fleet is made up of cars under 1400cc. Therefore, the annual extra costs for most motorists will be between €15 and €30, between 29 cent and 58 cent a week, or, put another way, between 4.1 cent and 8.2 cent a day. For the remaining cars, the increases will range from €32 for cars not exceeding 1500cc up to €137 for cars over 3001cc. Less than 0.5% of cars in the country are in this 3001cc plus category. For goods vehicles, the effect of the 12% increase will vary depending on the size in weight terms of the vehicle. Some 80% of vehicles in this category are at the lowest level of charge, meaning that they will pay an annual increase of €26 or 50 cent per week. A 12% increase is also proposed for trade licences, or trade plates as they are known. These are the green registration plates used by motor traders on vehicles, which are temporarily in their possession, in lieu of taxing such vehicles. While there are strict restrictions on the use of the plates they are transferable between vehicles. The increase for a pair of trade plates will be €27.

I want to ensure that local government is adequately financed to perform its functions. I want to ensure the effectiveness and relevance of local government to the public and to business. I want to ensure that local authorities can consolidate and build on the great progress made in recent years in rehabilitating our non-national road network. If local government is to continue its good work, it needs extra resources. Unfortunately, there is no magic wand I can wave to make additional resources appear from nowhere. If additional money is to be allocated to local government, this means other programmes must be cut or extra taxes must be raised, which is the reality.

People cannot have it both ways. If we are serious about the road network, we must ensure there is money for these roads. There is no bottomless pit of money somewhere to be dipped into from time to time. No Minister wants to increase taxes. However, if the Government is to lead, take responsibility and be accountable, hard decisions must be made. I took the decision to increase motor tax rates because it is necessary to protect and develop our non-national roads system, which is the bottom line.

The increases in motor tax rates set out in the financial resolution must be viewed against the background that, since 1993, the rate of inflation has increased by 33% compared to a 12% increase in motor tax rates. Allowing for the proposed increase, the changes in motor tax rates are still well below the rate of inflation.

This financial resolution will cease on the enactment of the relevant Motor Vehicle (Duties and Licences) Bill, which will be presented to the House at the earliest possible date.

Mr. Allen

We all have heard of the back door system in the All Ireland hurling and football championships. This measure is a classic example of the back door system in taxation. The measure should have been announced in the budget but as the Minister for Finance, Deputy McCreevy, did not have the backbone to give us all the bad news at once, he decided to load it on the unfortunate Minister for the Environment and Local Government, Deputy Cullen. It is a sneak increase in motor tax in the run-up to Christmas through a guillotined debate, which will have a serious effect on inflation, not to mention the pockets of every householder in the country. I listened with amusement to the Minister when he said people cannot have it both ways. Prior to the election, the Government was saying people could have it every way. This increase, coupled with the litany of increases over three budgets this year since the election, will drive the inflation rate high. Prior to this, I said inflation would breach the 5% mark but, having gone through the collective impact of all these increases, I believe inflation will breach the 6% mark next year, with the resultant consequences.

The Government, with its open promises and deception, has betrayed the electorate who supported it last May but who are now paying heavily for that deception and betrayal, and will continue to pay that cost well into the future. Since the election we have had, in effect, three budgets and a programme of cuts in services. The first budget, soon after the election, saw VHI charges increase by more than 20%, charges in the casualty unit in hospitals increased by 40%, ESB charges by 10%, college registration fees by 69% and the drug refund scheme by 30%. This was followed by a series of cuts in the social housing fund, the programme to extend medical cards was abandoned, the rent supplement scheme was capped, spending on the carer's allowance was cut, the first-time buyers' grant was abolished, community employment schemes were cut by 7,000, including a further 5,000 in the pipeline, and the National Development Plan went 62% over budget and is two years behind schedule.

On the eve of the budget there was the Minister for Health and Children, Deputy Martin's sneak increase in hospital charges, with an additional 5% increase in the cost of a private bed in a public hospital and the consequent knock-on effect on private insurance. It was the fourth such increase this year and there was a further price hike in the drugs payment scheme. Following the main budget, ordinary citizens will pay more tax, because one's tax credits have not been increased and tax bands have not been indexed. If one gets sick, one must now pay the first €70 per month on medicine and cheque cards and laser cards will cost more. Not only will first-time house buyers not get the grant but their tax benefits will mean less because of the increase in house prices as a result of the VAT increases. Single income families are being discriminated against because there is no increase in tax credits or bands. If one is concerned about infrastructure, the VAT increase will impact on that also.

Does anyone believe the financial institutions will not pass on to ordinary people the €100 million levy, yet nothing has been done about tax shelters created by the Minister for Finance and the Government to ensure the very wealthy avoid paying income tax in Ireland. The Minister has kept faith with his friends, the big money people, while there is another example today of how ordinary people will be affected. The increase in diesel prices will impact directly on competitiveness. He has tinkered around the edges with the cuts but there is more hidden than exposed. The only initiative to deal with the problem of rampant over spending is to set up a committee. The Minister has failed so far to say how he will address the problem and he is hoping and praying the economy will turn around and bale him out of the hole he dug for himself. Let us hope for the sake of the country that he will stop digging and begin to climb out.

The third budget this year comes in the guise of local authority estimates. Because of the inadequate funding provided by the Minister, local authorities are being forced to impose major increases in local charges. In Cork city this week commercial rates were increased by 6.75%, refuse charges will increase by 30% and car park charges are also being increased as a result of cutbacks by the Minister.

The Minister has come to this House and tried to justify the increase in motor tax by saying the money will improve the financial state of local authorities and help them out with the non-national roads maintenance programme when, in fact, he reduced the non-national roads spending by 27%, which does not take into consideration the inflationary factor. This increase will take €60 million from motorists and I am asking the Minister how much will go towards improving the national roads?

Mr. Gilmore

The way in which Governments and this House used to deal with the public finances was in two parts: first, the publication of a Book of Estimates setting out the Government's intentions with regard to expenditure and, second, a budget which would address how taxation would be raised to pay for it. This Government has changed that system. We still get the Book of Estimates where all the bad news is issued in one go as far as expenditure is concerned but, when it comes to taxation, we are now getting it in instalments. The Minister for Finance came in here on what was the official budget day, held up his head, grinned across the floor at us and told us he was not increasing income tax. In fact, the Government is increasing taxes by instalment. We now have taxes on credit cards, increased VRT, changed rules in regard to payment for hospital care and what we have today is, in effect, a mini budget.

The motion before us today is about raising taxes from motorists. It is ironic that this Fianna Fáil-led Government should choose to increase car tax as a way of raising revenue. Some of us have been around long enough to recall 1977 when Fianna Fáil bought that general election by promising to abolish car tax. Car tax has returned as one of the Government's main ways of raising revenue.

There is an argument for taxing cars to help to protect the environment and to encourage people to switch to public transport. Such an argument is valid only if there is a decent public transport system, but we do not have one. The actions of this Government and its predecessor have meant that the day when we have a reasonable public transport system – involving the Luas, decent rail provision and an adequate supply of bus services serving all parts of the country – is further away than ever. A car is a necessity and not a luxury for most people. Most people need to use a car to get to work as public transport will not take them there, to bring their children to school as we do not have a decent school transport system, to do their shopping because of the dislocation between residential and commercial development and to maintain contact with relatives and friends because of our public transport shortcomings.

The motorist is a soft target for the Government; a sitting duck for taxation. The resolution being proposed by the Minister, Deputy Cullen, is particularly cruel as it comes at a time when most motorists, particularly in urban areas, are stuck in traffic as a consequence of the Government's failure to deal with traffic problems. The Minister informed the House that 38% of the roads on which we drive are substandard. The rise in motor tax is unfair because it follows increases in vehicle registration tax and fuel, which is of particular concern to those who drive diesel vehicles. Motorists, especially young drivers, have also had to endure harsh increases in insurance costs in the past year or two.

The Minister for the Environment and Local Government has not mentioned that he is about to inflict further hardship on motorists in the form of energy taxes. Last week, I asked the Minister for Finance, who has been discussing the matter at a meeting of ECOFIN this week, to outline the position in relation to energy taxes, but he could not do so as negotiations were still at a sensitive stage. The Minister is in Europe discussing additional taxes on motorists, but the Government has yet to say what is being proposed.

The Minister for the Environment and Local Government has said that the moneys that will result from this tax will be added to the local government fund and will pay for non-national roads. He said that "to develop the non-national roads network, the local government system will need extra resources next year". He mentioned that he wants "to ensure that local government is adequately financed to perform its functions" and he claimed that he decided to increase motor tax because it is "necessary to protect and develop our non-national roads system, which is the bottom line". The bottom line is that the Minister is increasing motor tax because he deprived the national roads system by robbing money from the local government fund. It was made clear that the money was needed when the Book of Estimates was produced, as the provision for non-national roads in the Estimates was cut by 27%.

Mr. Cullen

That is not correct.

Mr. Gilmore

I have the figures in front of me. The fund for non-national roads was decreased from just over €54 million to under €40 million.

Mr. Cullen

Those are not the statistics for non-national roads.

Mr. Gilmore

When one takes into account the reductions in vehicle and driver licensing expenses, the total cut in the roads provision in the Estimates was 31%. In addition, the Minister froze the money going to the local government fund in the Book of Estimates: in 2002, the provision for the fund was about €420 million and it is almost the same in 2003.

Mr. Cullen

I did a good job in that regard.

Mr. Gilmore

The Minister cannot escape the figures as they appear in the Book of Estimates. The increase in motor tax is being provided for in the resolution before the House to fill the financial pothole created by the Government when it cut the money for non-national roads and the local government fund in the Book of Estimates.

Mr. Cullen

That is not the non-national roads.

Mr. Allen

What is it?

Mr. Gilmore

This week, the Department of the Environment and Local Government circulated among local authorities details of their 2003 allocations under the local government fund. When inflation is taken into account, there is a decrease in the amount of money made available to local authorities for next year. No provision has been made for the benchmarking pay awards that local authorities will have to fund from their own resources. The net effect of this measure is that local authorities throughout Ireland will have less money to spend in 2003 on maintaining and upgrading the roads for which they are responsible.

The Minister spoke about non-national roads in terms of the road networks between different towns and regions. The worst roads in Ireland are not those that link two towns or villages, but those found in urban housing estates. Such roads are found outside the homes of the people who are being asked to pay higher rates of motor taxation. Many of the estates to which I refer were built 20 or 30 years ago by speculators; the roads put in place were substandard and are now crum bling. The Department of the Environment and Local Government used to make a provision, known as the tertiary roads grant, for such roads, but it is no longer paid. It is another cutback I would like the Minister to explain. The senior engineer in the local authority of which I am a member received a letter from the Department on 13 November. The departmental official wrote:

I wish to refer to your letter of 6 November 2002 in connection with funding for class 3, or tertiary, roads in 2002. In recent years, allocations for tertiary roads were made from savings identified by this section as a result of undertaking a mid-year expenditure review. While a mid-year expenditure review did take place this year, no savings were identified that could be allocated to your council, or any other county council, in 2002 for tertiary roads.

Small repairs on worn-out roads in the urban areas where many of the people who are being hit with the additional car tax reside, will not be made as a result of another sneaky cut by the Department of the Environment and Local Government.

The Government is increasing the taxation burden faced by motorists, on top of the additional costs that drivers already have to incur. It is savaging the financial provisions for the improvement of roads and withdrawing funds from local authorities, which are charged with maintaining the roads network in the first instance.

Mr. Cuffe

We should be grateful that the Dáil will sit for only three more days before Christmas, as it seems there has been a tax increase every day that it has sat in December. Today is 12 December and by the time the 12 days of Christmas have passed there will be little left to tax, at the rate the Government has been imposing taxes recently. The three Scrooges – the Ministers, Deputies Brennan, McCreevy and Cullen – seem determined to impose a new tax on the people every day and they are taking it in turns to do so. The Minister for Transport has increased bus fares, the Minister for Finance has imposed new bank charges and the Minister for the Environment and Local Government is introducing new rates of motor taxation today. I understand the Minister, Deputy Cullen, will return to the House later today to wipe out social and affordable housing through an insidious Bill. The proposal before the House, to increase motor taxation, is not a good one. The Minister is enshrining a dangerous principle, that of funding local government through increases in car tax.

Mr. Cullen

I did not decide that principle; the rainbow Government did.

Mr. Gilmore

The rainbow Government did not do so, as the legislation was passed in 1998.

Mr. Cuffe

If the Minister had the courage of his convictions, he would look in a little more detail at taxation—

Mr. Cullen

I commend Deputy Gilmore's party for introducing the measure.

An Ceann Comhairle

Deputy Cuffe without interruption, please.

Mr. Cuffe

The Minister should order a root and branch reform of motor taxation rather than increasing taxes across the board.

Mr. Cullen

What does the Deputy mean?

Mr. Cuffe

This is not a green tax. It is simply a blunt, annual tax on all of those who possess a car. A much better way of approaching car taxation would be to tax on the basis of mileage. The individual who drives 10,000 miles pays the same tax as an individual who drives 1,000 miles per year. There is no element of green taxation in that.

Mr. Cullen

What about the toll roads?

Mr. Cuffe

The Minister could use a bit more imagination on this. He could do as the Green Party suggested, have a clean air tax on fuel. In that way those who drive the most would pay a little bit more for the non-renewable resources they use, for the pollution they cause and for the car crashes they cause on our roads. It is not a good form of taxation that the Minister is proposing. Not only that, but there is a disproportionate increase on the lower engine sizes on a percentage basis. I drive a Mercedes smart car, which has engine size of 600 cc I pay exactly the same taxation on that as someone with a 1,000 cc car. There is no incentive for anyone to look for a car that is under 1,000 cc.

There is a dangerous principle at stake here, that of simply having an annual tax on vehicles. There are better ways of doing this. The tax on a ten-year-old car is the same as the tax on a one-year-old car. It should be based on use rather than being an annual tax which has been raised higher on a percentage basis at the lower end of the scale. That is not good in terms of green taxation.

The Green Party will oppose this tax. We feel the Minister could do better and look forward to a real green tax in the future.

I am sharing my time with Deputies Cowley and Morgan.

Dr. Cowley

This is a further tax, by stealth, announced the day after the budget. As has been said previously we can nearly expect a budget every now or maybe even twice a day. So much for the boast of the parties in power, Fianna Fáil and the Progressive Democrats, that they are not increasing income tax. There are tax increases every day by indirect methods. This is very unfair to those who depend on their cars. Everybody will be affected, particularly those who can least afford to pay. It is directed against those who do not have the ability to pay and it is doubly unfair.

We all depend on the car in rural areas for work and to keep in touch. This tax, together with the increased tax on diesel will have a detrimental effect on people in rural areas. The galling part of all of this is that it will probably make no difference to the non-national roads. If it did, we would all be in favour of it but we are too cynical after years of neglect. Travelling on the roads as a general practitioner I am only too well aware of the terrible deprivation experienced in travelling from place to place, particularly in bad weather and in an emergency. It is impossible to get to hospital within the "golden hour" because of the very bad roads. There is talk of ring-fencing, but people have become so cynical over the years that if this tax translates into black stuff on the roads they will be happy.

This is a double mirror type of situation. On the one hand we are supposed not to have increased taxation, on the other hand we have it. If this positively affected our situation we would feel differently. With a 3 cent rise in diesel and the application of the 30% rise in vehicle registration tax to cars of 1,901 cc and over, it makes life more difficult for those who have to use their car, particularly in rural areas. We do not have public transport in rural areas so we depend totally on the car. It is a necessity, not a luxury. With the soaring cost of car insurance, particularly for young people, it is becoming increasingly difficult.

The main road into Mayo, the N5, is a national disgrace. The NRA say it is not for turning. The reason it is not for turning is that Mayo is not a priority. The Government has not made it a priority. This all adds up to neglect of the west.

Mr. Morgan

I know this is supposed to be a debate about motor tax resolutions, but it seems to be another episode in the budget. It must be the longest budget in history. The Government's spin machine gave a novel take on these motor tax hikes, the extra revenue will go towards improving the country's non-national road network resulting in a direct benefit to drivers. It sounds practical enough at first reading. We all know many areas where this extra €16 million could be spent. Unfortunately the budget estimates show a €14 million cut in non-national road spending, while the total road spending will only increase by 4%, which is less than inflation. With a total spending of just over €1 billion, the extra revenue from this tax will make no difference to road spending.

Once again there is sleight of hand and a lie. We need to turn this around, stop these mistakes and start governing. The 3% hike on diesel, the 1% tax for servicing and maintaining vehicles should be viewed with the protest of the haulage industry only 12 months ago about the massive increases in costs. This is a very necessary indus try because there are no rail goods services to carry and provide for industry, whether multinational or indigenous. This entire industry will suffer massively as a consequence of these hikes. This should have been done fairly and above board and it should not have been done in this underhand manner. Other increases such as gas, electricity and hospital charges were also announced outside of the budget. The Government needs to come clean. This unending budget, which is lasting almost 12 months is simply not fair.

Mr. McCormack

We have seen a budget every day since the budget. The increased taxes should be announced in the Dáil on budget day and there should not be a budget every second day. Mr. Martin O'Donoghue, in the 1977 election manifesto, promised to abolish road tax. He said that he would abolish unemployment and if there was no work to be done he would dig holes in the road and make people fill them again. He would not have to dig holes now. All he would have to do, if he were here now, is fill them. That is what the Minister should do. The mistake in this case was that funding for non-national roads was cut in the Book of Estimates. That is where the Minister slipped up. He obviously did not do his homework and hold his share and the Minister for Finance penalised him by telling him the day after the budget to go and find the €37 million which was cut in the Book of Estimates.

From the Minister's contribution, I question the manner in which he is spending the money. I even disagree with the system of using car tax to make up the deficit in the Book of Estimates from the non-national roads. Considerably less than half of this, only €1.08 million, is being spent in the BMW region, which I represent. There are fewer national primary roads in the BMW region than in any other. In my constituency, Galway West, there are no national primary roads at all. We are losing out disproportionately on spending in our area as a result of the way the Minister is proposing to distribute this money which should have been accounted for in the Book of Estimates.

An Ceann Comhairle

The Minister will now take questions for a period not exceeding 20 minutes.

Mr. Allen

Could the Minister set out the manner in which he proposes to spend the €60 million that will be taken in this manner?

Mr. Cullen

I will be announcing the non-national roads allocations in January. This money is going directly into the non-national roads fund, as the Deputy well knows. I commended and agreed with the decision taken by the rainbow Government that motor tax should go directly to the local authorities and the local government fund. What it did not do was to link it directly to non-national roads, as the last Government did. This was something I supported strongly and still do. My job, as the Deputies know because they have rightly been raising this issue in the House over the last number of weeks, is concerned with the funding of local government. I am responsible for keeping it at the level to which we have brought it over the last number of years.

Mr. Gilmore

The Minister says that this increase in motor tax will result in more money for the local government fund and for non-national roads. He has already notified the local authorities of the local government fund allocation for this year. Will he issue another circular to the local authorities, in advance of the completion of their annual estimates, notifying them of the additional money they will get from this increase in motor tax? When he issues the circular on allocations for non-national roads in the new year, what percentage increase can local authorities expect to receive compared to the 2002 allocation?

Mr. Cullen

As I said to the Deputy, I will announce the increase. I am considering the figures at the moment and I will give that information to the local authorities, as is the normal procedure. The non-national roads allocations have been announced every January for the last number of years. The funding I have taken in will go directly towards maintaining the non-national roads fund in the future.

The Deputy asked a direct question in his speech.

Mr. Gilmore

The Minister should stick to the question. What will the percentage increase be?

Mr. Cullen

I do not know at this stage. I am working out the figures.

Mr. Gilmore

Surely the Minister can give an estimate. He is raising taxation.

Mr. Cullen

The Deputy knows full well that I will not come into this House and deal with a matter pertaining to local government by announcing in advance what the figure will be. I am working out the figures for every single local authority. It will obviously vary between local authorities.

Mr. Gilmore

As it always does.

Mr. Cullen

When it is done I will let the Deputy know.

Mr. Gilmore

What will the percentage increase be overall?

Mr. Cullen

I have just completed the processes—

Mr. Gilmore

This is where we call the Minister's bluff. There is no extra money for roads.

Mr. Cullen

Does the Deputy want me to answer the question at all?

Mr. Gilmore

I do. What is the percentage increase?

Mr. Cullen

I have just given the announcements about the local government fund, containing all the increases, to all the local authorities.

Mr. Gilmore

And it is less than inflation.

Mr. Cullen

Most of them thought they would not even get what they got last year but I managed to give increases across the board. I will announce the non-national roads fund allocation in January.

Mr. Gilmore

There is not an extra penny there.

Mr. Morgan

The national development plan provides for an investment of €2.43 billion in the non-national road network between 2000 and 2006. Will this sum be paid for entirely by additional increases on an annual basis, as has happened this year, from motorists and the transport industry?

Mr. Cullen

It is not coming off the backs of motorists even as we speak. I am doing my job as Minister for the Environment and Local Government with regard to the non-national roads fund. I am not sure what will happen in the future any more than is the Deputy. I do not have a crystal ball. I am not expecting, however, to go back to the motorist, even though the increases over the last ten years, including this year's 12% increase, have been substantially below inflation, which was 33% over the same period.

Mr. McCormack

The Minister said that his priority was to keep up the national road fund. Why, when the Book of Estimates was introduced, did he not adhere to his stated policy? Why was there such a cut in the national road fund in the Estimates?

Mr. Cullen

I am glad this question is being repeated because Deputy Gilmore asked it already. I have made my point clearly: people must not want to read or understand the Book of Estimates. The subhead to which the Deputy refers in the Book of Estimates was the serviced land initiative fund, whose 41 identified projects were almost all completed. We do not roll capital money on. The projects are finishing up so naturally the money is going down. The out-turn for last year was €41 million and the provision for next year is €39 million, so the decrease is not even 21%. The reason for the decrease is that the money has been spent and the projects delivered. That was a specific subhead and had nothing to do with what we are discussing.

Mr. McCormack

It has everything to do with it.

Mr. Cullen

It has nothing to do with it: it is a separate fund.

Mr. McCormack

Then why does the Minister want money at all?

Mr. Gilmore

The Minister insists that this extra taxation of motorists will result in more money for local authorities. I am returning to this point because I want to be clear on it. Local authorities have already been notified of their allocations under the local government fund. The next circular the local authorities will get from the Minister would normally be a notification about the non-national roads fund. I accept that the Minister cannot tell us, in advance of notifying it, what each local authority will get. Taking all of the local authorities together, however, by what amount will the allocation for non-national roads be increased in 2003 compared to 2002?

Mr. Cullen

As the Deputy knows, I have not yet completed that process. I simply have not done it.

Mr. Gilmore

I do not accept that.

Mr. Cullen

The Deputy asked me a question and I am giving a answer.

Mr. Gilmore

The Minister is raising taxation. Surely he has an estimate.

Mr. Cullen

I will try to satisfy the Deputy. As I said on the day I announced the motor tax increases, as the Deputy knows full well, my objective was at least to maintain the level of funding into the future.

Mr. Gilmore

The Minister is just making up for the cut.

Mr. Cullen

We know well that our financial resources today are very different from what they have been over the last five years. I am not talking only about Ireland, but about the European economy and the global economy.

Mr. Gilmore

The Minister should stick to national roads for the moment and forget the autobahn.

Mr. Cullen

I took this view because the worst case scenario was that we would see substantial reductions in the continuing investment in non-national roads. I was not prepared to countenance this. With this increase in motor taxation I could at least maintain the fund with small increases so that the level of investment would remain the same.

Mr. J. Higgins

For the benefit of today's hard-pressed taxpayer, could the Minister let us know whether there is an end in sight for this new phenomenon of the rolling budget, with a cut one day and a new tax the following day, all hitting the same body of people? What moral justification does he have for coming into the House and demanding a further €60 million, most of which will come from the working people he has already hit with a whole range of hidden taxes in the budget, while his Government intends to give back €650 million next year to the corporate sector and refuses to touch tax shelters such as the stud farm industry?

An Ceann Comhairle

The Deputy must ask a question related to the finance motion.

Mr. J. Higgins

This is related to the motion. The Minister is arguing that the motion relates to the financing of local authorities, which have been left short of money over many years.

An Ceann Comhairle

It is not necessary to make a statement. The Deputy should ask a question.

Mr. J. Higgins

I asked a very important question on behalf of the taxpayers I represent. I am seeking moral justification. I also want the Minister to confirm that there would be adequate financing for much improved services if the taxation system focused on the wealthy and privileged sector that his Government protects, rather than hitting ordinary people again and again.

Mr. Cullen

Everyone knows that the budgets introduced by this Government have been the most socially productive in years; that is recognised internationally.

When it was introduced by the rainbow Government, and I supported it, never was the increase in motor tax announced on budget day – not once. It was always separate and for a good reason. This is a separate taxation matter, it has to do with local government, not the Exchequer.

Mr. J. Higgins

Of course it is to do with the Exchequer. It short-changes local authorities.

Mr. Cullen

This has nothing to do with the Exchequer. We have a different perspective on it. I want local government to mean something. It must be responsible for its own resources, service delivery and, in future, taxation. That is where I believe it should head. It was never an issue for me that this should have been announced on budget day. I specifically did not want it announced then, I wanted this to be seen as a separate local government matter so people can see a direct return on the money they give in taxation. They do see a return in this area because it is ring-fenced for the local government fund, specifically for non-national roads.

Mr. Allen

Does the Minister agree that the allocation for non-national roads in the Estimates shows a decrease of 27%?

Mr. Cullen

The out-turn last year was only €41 million.

Mr. Allen

The Estimates state there is a reduction of 27%. Will the €60 million take from motor tax go directly to the non-national roads budget? Will the two figures, the one in the Estimates and the take from road tax, be reflected in the non-national roads budget?

Mr. Cullen

The Deputy has the luxury of presuming things but I have to act.

Mr. Allen

These are the Minister's own figures.

Mr. Cullen

The Deputy is referring to a subhead for a specific fund that was established some years ago for the serviced land initiative, ring-fencing money for 41 projects. All of them are almost complete and the big money has been spent. The initiative, therefore, is coming to the end of its lifetime. I was surprised that the local authorities only drew down €41 million last year. I did not stop them, there was more money there but they did not have the projects to spend it on because they had all been completed. This year I have reduced the figure from €41 million to €39 million. That is what I believe is needed to finish off in the coming year.

This has nothing to do with the non-national roads fund in the way Deputies are interpreting it. That is attached to the local government fund. The reason I did this with motor taxation was to retain the same level of investment in non-national roads.

Mr. Gilmore

The Minister estimates this will raise €60 million in the coming year. When we tot up the separate allocations that will be made to the local authorities for non-national roads early in the new year, will €60 million extra be allocated to the local authorities? How much extra, if anything, will there be? In response to my earlier question, the Minister has shifted from his opening script, where he gave the impression this would be extra money for roads, to talking about maintaining the roads allocation. In that case, this extra money being raised from motorists is not extra money for roads at all. If there is an increase, what does the Minister estimate it will be? It is unacceptable that the Minister does not have an estimate of the amount by which the non-national roads allocation will be increased as a result of this measure.

Mr. Gormley

The Minister stated that he wants local government to mean something. When, then, will he get rid of the dual mandate?

Mr. Morgan

The allocation will make no difference in roads funding. Does the Minister accept that these figures do not represent an extra cent in spending? It is by sleight of hand he can say that it is not a reduction.

Mr. McCormack

How much will the Minister's proposed measures add to inflation, particularly when VRT, diesel and insurance costs have increased for motorists? When will the Minister announce his position on the dual mandate?

An Ceann Comhairle

That is not related to this financial resolution.

Mr. McCormack

It is related because we will no longer have to worry about this matter.

An Ceann Comhairle

Even if we stretch our imaginations it cannot be included.

Mr. J. Higgins

Does the Minister agree it is disingenuous of him to claim that this tax is for extra funding for the local authorities?

Mr. Cullen

I did not use that phrase.

Mr. J. Higgins

The Minister set out to give that impression. We now know, however, that it will make up a short-fall because of inadequate funding of local authorities. It is a fiction to pretend this is a new, virtuous Government approach to increase local authority resources when it is a tacky attempt to fill the gap.

Mr. Cullen

This will add 0.1% to the CPI, a very marginal effect.

Mr. Allen

If every 0.1% is totted up, it will soon add up to a lot.

Mr. Cullen

It is my job to ensure there are more than adequate resources available to local government. I have already distributed the local government fund, which had an increase of €33 million.

Mr. Gilmore

An increase of 4%, less than the rate of inflation.

Mr. Cullen

It was an increase of 5%. Part of that money can be used for discretionary local government spending under different headings, which could include roads. I never said that this is extra money.

Mr. Gilmore

This is the admission of the day.

Mr. McCormack

It is extra tax.

Mr. Cullen

I want to maintain and develop the non-national roads structure. That is my job and I faced choices. I was not prepared to see a decrease in the non-national roads fund. That would have been disastrous because we have achieved a high level of road maintenance.

Mr. McCormack

The Minister should have fought his corner in the Estimates.

Mr. Cullen

Funding for local authorities has risen by 90% in six years. That is a significant transformation in the fortunes of local government and the services it provides, but specifically of non-national roads which have been transformed. I intend to ensure that there is the same level of investment in non-national roads so that the figure of €2.6 billion is reached in the current development plan.

Mr. Gilmore

That means not an extra penny.

Mr. Gormley

What of the dual mandate?

Question put: "That Financial Resolution No. 15a be agreed to.”

Tá

Ahern, Dermot.Ahern, Michael.Ahern, Noel.Andrews, Barry.Ardagh, Seán.Aylward, Liam.Brady, Johnny.Brady, Martin.Browne, John.Callanan, Joe.Callely, Ivor.Carey, Pat.Carty, John.Cassidy, Donie.Collins, Michael.Cregan, John.Cullen, Martin.Curran, John.Davern, Noel.de Valera, Síle.Dempsey, Tony.Dennehy, John.Devins, Jimmy.Ellis, John.

Fahey, Frank.Finneran, Michael.Fitzpatrick, Dermot.Fleming, Seán.Gallagher, Pat The Cope.Glennon, Jim.Grealish, Noel.Haughey, Seán.Hoctor, Máire.Jacob, Joe.Keaveney, Cecilia.Kelleher, Billy.Kelly, Peter.Killeen, Tony.Kirk, Seamus.Kitt, Tom.Lenihan, Brian.Lenihan, Conor.McDowell, Michael.McEllistrim, Thomas.McGuinness, John.Moloney, John.Moynihan, Donal. Moynihan, Michael.

Tá–continued

Mulcahy, Michael.Nolan, M.J.Ó Cuív, Éamon.Ó Fearghaíl, Seán.O'Connor, Charlie.O'Dea, Willie.O'Donnell, Liz.O'Flynn, Noel.O'Keeffe, Batt.O'Malley, Fiona.O'Malley, Tim.

Parlon, Tom.Power, Peter.Power, Seán.Sexton, Mae.Smith, Brendan.Smith, Michael.Wallace, Dan.Walsh, Joe.Wilkinson, Ollie.Woods, Michael.Wright, G. V.

Níl

Allen, Bernard.Boyle, Dan.Breen, Pat.Broughan, Thomas P.Burton, Joan.Connolly, Paudge.Costello, Joe.Coveney, Simon.Crawford, Seymour.Crowe, Seán.Cuffe, Ciarán.Deasy, John.Durkan, Bernard J.English, Damien.Enright, Olwyn.Gilmore, Eamon.Gogarty, Paul.Gormley, John.Gregory, Tony.Harkin, Marian.Hayes, Tom.Healy, Seamus.Higgins, Joe.Higgins, Michael D.Hogan, Phil.Kehoe, Paul.Lynch, Kathleen.

McCormack, Padraic.McGinley, Dinny.McGrath, Finian.McGrath, Paul.Morgan, Arthur.Naughten, Denis.Neville, Dan.Ó Caoláin, Caoimhghín.Ó Snodaigh, Aengus.O'Dowd, Fergus.O'Shea, Brian.O'Sullivan, Jan.Pattison, Seamus.Penrose, Willie.Perry, John.Rabbitte, Pat.Ring, Michael.Ryan, Eamon.Sargent, Trevor.Sherlock, Joe.Shortall, Róisín.Stagg, Emmet.Stanton, David.Timmins, Billy.Upton, Mary.Wall, Jack.

Tellers: Tá, Deputies Dermot Ahern and Kelleher; Níl, Deputies Durkan and Stagg.

Question declared carried.