Niall Collins
Ceist:505. Deputy Niall Collins asked the Minister for Transport, Tourism and Sport his views on a proposal (details supplied); and if he will make a statement on the matter. [3172/18]
Amharc ar fhreagraTuesday, 23 January 2018
Ceisteanna (505)
Freagraí scríofa
The abolition of paper motor tax discs is not currently being considered in my Department. Any replacement of the requirement for the display of discs on vehicle windscreens would need to be considered in the context of the level of application of Automatic Number Plate Recognition (ANPR) by An Garda Siochána, in order to ensure that adequate enforcement levels are maintained.
As you may be aware, the abolition of the motor tax disc took effect in the U.K. from 1 October 2014. In that jurisdiction, a vehicle excise duty evasion survey is carried out on a bi-annual basis. The results of the survey carried out in 2015, the first following the abolition of the disc, found that the rate of unlicensed vehicles observed on the road was much higher than had been observed in the previous survey in 2013, prior to the abolition of the disc. The survey concluded that the increase was probably due to the changes in the vehicle licensing system which took effect from October 2014, which included the abolition of the disc. The 2017 survey, published on 16 November 2017, found that the rate of unlicensed vehicles observed on the road had increased since the 2015 survey.
The Cost of Insurance Working Group, chaired by the Minister for Housing, Planning and Local Government, Mr. Eoghan Murphy, T.D., in his former role as Minister of State at the Department of Finance, published a Report on the cost of motor insurance in January 2017. The Group considered the issue of the abolition of the paper-based insurance disc as part of its deliberations. The decision of the Working Group was that it was not recommending the phasing out of the paper-based insurance disc. In arriving at its conclusion, the Group noted the experience in the U.K. following the removal of the paper motor tax disc and, in terms of enforcement, set out that Ireland is not yet in a position to underpin an enforcement regime where technology would be the primary method of enforcement. In relation to the use of ANPR, the Group recommended that the phasing out of the paper insurance disc should be reviewed in the future as the development of technology progresses. The continued use of the paper motor tax disc will also be kept under review in that context.
The replacement of motor tax with increased fuel charges is also not being considered at the current time. In order to maintain the tax base currently realised from motor tax, an increase in fuel duty in the order of some 30c per litre would be required, with direct negative impacts on the rate of inflation and economic competitiveness. As indicated in the Question, goods vehicles and other high usage and high mileage vehicles, such as public service vehicles and buses, would have higher costs under a pay-as-you-drive system. There would be other distributional effects, including on those with longer distances to commute.
A significant increase in fuel duty would lead to an increase in cross-Border fuel purchasing, further depressing the tax base and requiring a compensatory adjustment to make up the shortfall. The potential for an increase in fuel laundering is also clear in this regard. Any benefits to replacing motor tax with fuel duty would have to be weighed against these issues, and others, before any such change could be contemplated.
In relation to the environmental issues raised in the Question, motor tax for pre-2008 cars is based on engine size. The basis of charging from 2008 onwards is on carbon dioxide (CO2) emissions. The public consultation process on the proposed changes, in December 2006, made it clear from the outset that the objective of the new motor tax system was to influence the future purchasing decisions of consumers in favour of lower carbon emitting vehicles. European Environment Agency (EEA) statistics show that the average emissions of new cars in Ireland in 2001 was 166.6 grams per kilometre (g/km), reducing to 161.6g/km in 2007, just prior to the introduction of the new system. The average emissions of new cars entering the fleet in 2015 was 114g/km, ahead of the EU target of 130g/km set out in EU Regulation No. 443 of 2009 which sets performance standards for new passenger cars as part of the Community’s integrated approach to reduce CO2 emissions from light duty vehicles. It is, therefore, clear that the measure has been successful from an environmental perspective in reducing emissions from CO2. The issue of emissions from diesel cars will be considered in the context of the Clean Air Strategy being developed by the Minister for Communications, Climate Action and Environment, Mr. Denis Naughten, T.D.
In respect of payment periods, motor tax is payable on an annual, half-yearly or quarterly basis. The rates applicable for the half-yearly and quarterly options are 55.5% and 28.25% of the annual charge, respectively. These relativities have remained generally consistent since the 1960s.
The differential takes account of the extra workload for staff in motor tax offices and the Driver and Vehicle Computer Services Division of my Department (which operates the online motor tax system) in processing non-annual renewals, as well as the resultant administrative and printing costs that arise, including the issuing of renewal notices. Each quarterly renewal of motor tax follows the same administrative procedures as the annual renewal process. Consequently, renewing on a quarterly basis generates four times the workload of an annual renewal for the equivalent period.
The loss of income that would arise from changing these arrangements would have a negative impact on the total collected via motor tax and would have to be borne elsewhere in the motor tax system or through the taxation system generally.
On the basis of the current payment arrangements, the number of motor tax discs issued each year is in the order of some 5m discs. The introduction of a facility whereby a motor tax disc can be taken out on a monthly basis would significantly increase the volume of discs and renewals, with a resultant increase in the costs of operating the motor tax system administratively and in terms of financial costs and controls, including bank charges, which are not currently met by vehicle owners.
In respect of a system of payment by direct debit, it should be noted such a proposal would require significant additional enforcement provisions to recoup income lost to the taxpayer where there are insufficient funds in personal accounts to meet the payment or where the direct debit option is cancelled after a disc has been issued, as well as provisions to enable recovery of a disc in such circumstances.