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Seanad Éireann díospóireacht -
Thursday, 18 Oct 2001

Vol. 168 No. 7

Adjournment Matters. - Taxi Regulations.

I welcome the Minister of State to the House. My motion on the Adjournment relates to one of the issues that has caused much grief to decision makers over a long time. It relates to the taxi service and what will happen regarding taxi plates. This matter has been badly handled over many years and when the provision of new taxi plates was conferred on the local authorities in the mid-1990s, the four local authorities in Dublin set about putting together a package of proposals in regard to a gradual introduction of extra taxi plates. An enormous degree of lobbying took place as some sectors of the industry did not want extra plates.

The Taoiseach decided to intervene and stymied the whole development which was being undertaken by the local authorities, which had statutory responsibility for the matter. Out of the blue it became the responsibility of the Minister of State at the Department of the Environment and Local Government who deregulated the industry. In principle I am not in favour of deregulation. Every industry needs to be regulated. This substantial act of deregulation by the Government arose from neglect over a period and a mishandling of the industry. Once it happens there are grave consequences and there is a negative impact on many people. Obviously customer service should improve. The number of taxis has doubled. Given that there has not been a moratorium on the number of hackneys, they have been increasing all the time. An industry that had a certain amount of cohesion became scattered and incoherent. A taxi plate that had a certain value now has no value.

A number of people got into the industry on a proper basis. For example, people who had taken redundancy money used it to buy a taxi plate. They saw it as a contribution towards their pension in later years and a nest egg for their family at the time. It had a value, but once deregulation was introduced it had no value. The adverse effects have been experienced by people who had mortgages and other borrowings. There are great difficulties in making such repayments. Many people are now paying for a plate which cost £70,000 or £80,000 and which now has no value. They are in hock to banks, building societies and credit unions on what they believed was a genuine asset.

Widows are probably more affected than anybody else in that they are unable to work the plate. The plate has no sale value and the breadwinner is no longer there. A number of people have suffered as a result of the deregulation of the industry. They are the people on whose behalf I raise the matter. The organisation, Families Advocate Immediate Redress, has been established. I do not know whether it has had significant talks with the Minister on the matter. It has been lobbying and has gone to the European Commission on the matter. There is much concern in the organisation, many of whose members are suffering hardship arising from this matter. Has the Minister of State taken significant steps to ensure hardship is alleviated in the taxi industry?

I thank Senator Costello for raising the issue which I shall answer on behalf of my colleague, the Minister of State, Deputy Molloy.

The October 2000 High Court judgment created the legal position that limitation of taxi licences in the interests of existing licence holders could not be sustained. The Road Traffic (Public Service Vehicles) (Amendment) (No. 3) Regulations, 2000, were made to respond to the reality of the new legal situation and sought to establish orderly licensing arrangements within it.

The courts have clarified on a number of occasions since 1992 that there can be no legal duty on the State to compensate taxi licence holders in relation to open market values of licences. However, the Government recognised that some difficulties might be caused by the new taxi regime for some existing taxi licence holders. It was acknowledged that given the many changes which were taking place, certain recent new holders of taxi and wheelchair accessible taxi licences would be in a position of having paid much higher licence fees to local authorities than those which now obtain. Accordingly, following the making of the regulations providing for liberalisation of availability of taxi licences, arrangements were made for the introduction of a scheme of refunds by certain local authorities in relation to taxi licence fees charged at above the default level fixed in the Public Service Vehicles Regulations, 1995.

Additional mitigating measures were included in the Finance Act, 2001, which provides for a new scheme of capital allowance for expenditure incurred on the cost of taxi licences acquired on or before 21 November 2000. The allowances are effectively back-dated, with the cost deemed to have been incurred on 21 November 1997 where the licence was purchased prior to that date. The actual cost of the licence can be written off over five years at the rate of 20% per annum in line with the new write-off period for capital allowances for plant and machinery. The write-off will be allowed against the trading income only of the licence owner who drives the taxi. However, if additionally the same vehicle is rented out on a part-time basis, the cost can be written off against both the trading income and the rental income from the vehicle in question.

The Act also includes provisions targeted at addressing some hardship cases that had been brought to the attention of the Minister for Finance. Section 51 of the Act provides that where a licence was inherited from a deceased spouse who carried on a taxi trade the licence holder may offset the capital expenditure incurred on the original acquisition of the licence against the rental income from the licence, even if there is no trading income from the licence. This measure will only be available in respect of one licence. Where inheritance tax or probate tax was paid in respect of a taxi licence, the value used for such tax purposes may be used instead of the actual capital expenditure cost, if that value is higher. The capital allowance scheme also caters for the situation where a widow or widower, who has inherited the licence from his or her spouse, lets the licence to a third party who provides the associated vehicle.

These provisions offer to taxi licence holders affected by liberalisation of entry to the taxi market, a much improved position on that which existed beforehand. Taxi licence holders can now offset the cost of their taxi licences against both their trading income and their rental income. Previously, a taxi licence holder would not have been allowed to write off the expenditure incurred in buying a taxi licence against his or her income.

Claims for capital allowances should be made to the individual's tax office. A claim should include details of the date the licence was acquired, the actual cost of the licence, the date the individual started the taxi trade and, where a licence has been part let, the percentage use of the taxi vehicle for trading and letting purposes. If the individual has already submitted a return of income in respect of the tax years for which the allowances are being claimed, these details should be forwarded in support of a written claim to the tax office. Otherwise the details should be included with the individual's return of income for the tax year or years in question.

The value of any tax refund due in respect of the claim for the allowances will depend on the cost of the licence, the individual's marginal rate of tax for each tax year for which the allowance is claimed and the amount of income, if any, liable to tax at that rate.

There are no current proposals for mitigation measures beyond the Finance Act, 2001, provisions and the scheme of taxi licence fee refunds by certain local authorities. However, I understand that at a meeting with SIPTU officials on 25 July 2001, the Minister of State, Deputy Molloy, requested the submission of a document categorising cases of specific hardship which may not be fully covered by the current mitigation measures and it is understood that this document is being prepared by SIPTU. The Minister of State is also aware of representations from Families Advocate Immediate Redress and has suggested to FAIR that it may wish to communicate with SIPTU officials in relation to their concerns on this matter or make a separate submission on the matter to the Department of the Environment and Local Government. It must be stressed, however, that there is no guarantee that further measures will be possible and the Minister of State would not wish to raise hopes or expectations unduly in this regard.

The Seanad adjourned at 6.50 p.m. until 2.30 p.m. on Wednesday, 24 October 2001.

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