Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

In fairness, I should acknowledge that this is a matter that Deputy McGrath has raised with me and I note that he has just joined us now. I am sure he will be raising this on Report Stage as well as he has related amendments. I will say a word about the section and my approach to it.

On the section itself, a partial repayment of VRT has been available since 1993 on certain vehicles acquired by vehicle leasing or hiring businesses or for providing driving lessons. This repayment reflects the VRT charged on the VAT element of the vehicle and currently represents 18.7% of the full VRT charge.

This repayment is a legacy from 1993, when vehicle excise duty was being replaced by the VRT to ease the transition for car leasing and hire companies by ensuring their costs did not increase under the new VRT regime. This repayment can no longer be justified as a tax expenditure which is not available to other sectors and in the context of typical VRT charges having reduced very substantially since the introduction of the CO2-based VRT charging in 2008.

I have decided that the repayment will not be available for vehicles registered on or after 1 January 2019. However, until 1 April 2019, it will be possible to make claims for vehicles registered up to and including 31 December 2018.

I will make two broad points about this. First, When I became Minister for Finance, the main piece of work I asked my Department to do was to come back to me with tax and policy changes that were made across the period of our greatest economic difficulty that were no doubt justified then - we will begin debating another one of these measures later on this morning or tonight - in order for me to reassess them now in the light of where we are now. If we do not do this now we are going to end up with a tax code that is full of exemptions and changes that were made at a time that they were needed, and we will not be able to do something similar when we face another need in the future.

What I also asked them to do was to come back to me with different matters within our tax code, changes made even before the crash period that are still there.

This is a transitionary agreement for a transitionary policy that has now been in place since 1993. If we do not become more focused on ensuring that changes that we made when they are needed are re-examined at a time when the need is less, then two things are going to happen. The first is that our tax base will become narrower and we will only appreciate how narrow it becomes at a time of need again. The second thing is that interests and groups come looking for changes that at times are justified. We have to be willing then to hold the line and make the case that if that change was made at a time when it was needed, if the need is no longer there and the time has passed we should be able to undo it. If we are not willing to do this change by change, then the role of my Department, and the State overall, becomes progressively challenged. I do not want to see that happening. I am going to go through all of these changes, both big and small. This is one of the smaller ones but I believe its time has passed. We will examine whether it is needed and make a case accordingly. As to whether it will have an effect, the honest answer is it probably will have an effect on some companies that are involved in this sector.

For example, it may have an effect on the availability of cars and what fleet companies have available. They should be able to manage this change as the relief has been available for a long time. We should be clear that, if we are to make changes such as this, we will undo them when the time is right. The time is now right.