I thank the Ceann Comhairle for having selected this issue.
The difficulties in the motor trade have been signalled over the past 12 to 18 months in particular. The solution to them, however, has nothing to do with providing extra finance. If anything, money would come into the Exchequer if this issue was dealt with in a constructive and organised way.
My constituency of Mayo woke up last Tuesday morning to the loss of 70 jobs in Casey's car dealerships in Ballina and Castlebar. Castlebar accounted for over 45 jobs, while Ballina had over 15. Casey's was not a company that grew out of the Celtic tiger over the last ten years, but had operated in Mayo for the past 40 years. It has provided hundreds of jobs and sold thousands of cars to the people of Mayo.
I have been discussing the matter with the workforce this week. Over 10% of them have 30 to 40 years' service with the company. One worker told me that on Tuesday, for the first time in 50 years, he had no work to go to. That says something about the quality of the company and its staff.
The annoying thing about these job losses is that something could have been done to prevent them, but Government inaction led us to this stage. The Government has contributed to the thousands of jobs lost in the motor industry over the last 12 months. Over 60,000 jobs are involved in the motor trade nationwide. Before the recession, in July 2007, the Government introduced an emissions-based tax on cars, which opened the floodgates for imported cars. The Government then increased the VAT rate from 15% to 21%, which further widened the gap. The result, in Mayo alone, cost the Exchequer millions of euro in lost vehicle registration tax or VRT.
In January 2007, some €12 million was paid in VRT by car dealerships in Mayo. At the beginning of this year, however, that sum had fallen to €1 million. For the country as a whole, the sum in 2007 was €2 billion, but it is projected to be €500 million this year. A report by Dr. Peter Bacon recommended that the Government should reduce VRT by 25% in the forthcoming budget. Those are the salient facts and figures.
My assertion is that 15% of a smaller VAT amount is better than 21% of no sales. In 2007, 150,000 cars were sold in Ireland, but this year fewer than 60,000 will be sold. Of the 150,000 cars sold in 2007, 80% were bought with finance released from banks and other financial institutions. Last year, only 10% of the 60,000 sales were based on sales from banks. In other words, buyers had to have the money up front. What is needed now is a package of measures to help protect the thousands of jobs in the motor industry in Ireland. Eleven major dealerships have already gone to the wall in the west this year. Other countries have introduced scrappage schemes that have proved successful, so that could be one element of a solution. The VAT rate needs to be looked at also and finance needs to be released. If the Government continues to sit on its hands on this issue, some other company will suffer the fate of Casey's in Mayo next week. We need urgent action now.
