Pádraic McCormack (Galway West, Fine Gael)

According to the Minister of State, the increase in motor tax rates will yield an additional €34 million in the current year. This rate increase has been in operation from 1 January 2004 and anyone who has had to renew his or her motor tax has paid an additional 5%. The motorist is heavily taxed, having to pay VAT, VRT, road tax and fuel tax. A motor car is not a luxury but an essential necessity to get people, particularly young people, to and from work.

It was stated that the money will be ring fenced, but it may be used for a variety of general purpose needs of local authorities and to finance non-national road grants. I would like "the general purpose needs of local authorities" to be defined, in order to know for what exactly the yield from motor tax can be used. It is not ring fenced to the extent that it is solely used for roads purposes. Could it be used to pay benchmarking awards? As stated, it may be used for the upkeep of social housing, operation and maintenance of public water and sewerage systems, waste management, care of the natural environment and running the fire services and so on. As it is not ring-fenced solely for investment in roads, the motorist is not getting value for the 5% increase. In other words, it is simply another local tax to replace what was given to local authorities in rates support grants. The development charges introduced this year are similar. Some local authorities are not introducing the development charges as they consider a charge ranging from €8,000 to €10,000 up to €20,000 is a very severe penalty on first-time buyers.

The Minister for the Environment, Heritage and Local Government is taking a new direction to raise local taxation. The total grant allocation for non-national roads is €477 million in 2004. I live in Galway city where there are approximately 50,000 cars, however I do not know how that figure compares with the number of cars in rural areas. The money paid in motor taxation is not spent in proportion to the area in which it was raised, certainly the yield from 50,000 cars is not spent on non-national roads in Galway city. We are a long way from what the then Fianna Fáil Government did in 1977 when it was in a tight corner and abolished motor taxation as well as rates to win a general election. Motor taxation is back and is accepted as local taxation.

On the question of rebates of tax for disabled drivers and disabled passengers, in 1997 the Minister for Finance set up a review group to look into this matter which I understand reported to him in October 2002. Yet the Minister has never published that report or made known its recommendations. Will he consider amending the regulation that 10% of the net cost of the car must be spent in converting it for use by a disabled driver or passenger, even though in some cases it may not be necessary?

How much money do the urban councils spend? Some €27 million was allocated in local road grants to Waterford city. The Minister of State pointed out that the 2004 package was increased by 10%, the largest increase in recent years. We all, of course, realise that the local elections will be held this year and the councillors from the Government parties have to be appeased by increasing spending on the roads programme.

The 5% additional increase in motor taxation is taking an extra €34 million tax from the motorist who is taxed at every move he or she makes. Will the Minister consider the points we have raised? I know the majority will ensure the Bill will be passed and the reality of the 5% increase in motor taxation will become law.

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