Professor Edgar Morgenroth:

I have not done research on why we have this kind of high reliance but it is something we see and it is not well understood even in terms of its revenue generating functions. We know that the revenue from VRT, for example, declined very rapidly during the economic crisis as new car purchases dropped. That has a serious implication for the Exchequer as there is a reduction in income just at the time when there is an increase in expenditure. It is quite a volatile tax as well, which is something that we have not really looked at. I have done some research on related areas on other taxes but not on motoring taxes. The issue of imports is interesting. We may not see it but in Germany one cannot sell a second-hand diesel car. The values have absolutely plummeted. The reason is in Germany individual cities are contemplating bans. The market is not sure what will happen so the risk-averse thing is to not buy a diesel car. They are going in that direction. They are now going towards petrol cars and will probably end up with higher CO2 emissions, which is not really what we want either. In the meantime car dealerships are sitting on a very large stock of second-hand diesel vehicles that they cannot sell. Given they are left-hand drive, they are less likely to come here. If there was a similar situation in the UK for example, one could easily see them coming here if the market here was open for those vehicles. It could backfire having this back door into the Irish market of second-hand vehicles.