John Gormley (Dublin South East, Green Party)

Alternatively, if the choice is to purchase a high CO2 emissions car, a higher rate of motor tax will apply.

For most of us a car is likely to be the most expensive thing we will ever buy, with the exception of a home. Every year, more than 150,000 Irish people decide to buy a brand new car. The prices paid by consumers range from €11,000 for the most inexpensive models to, in rare cases, large six figure sums. It is not a decision many people make lightly and most people choose very carefully when buying. Considerations such as affordability, functionality, economy, safety, performance and colour have traditionally come into play for people when deciding on what car best suits their need. From 1 July, however, when people decide on what car to buy, they will add a new factor. They will need to "think carbon". With our new taxation system for cars, this decision to think carbon can save them thousands of euro.

A key part of the motor tax and VRT initiatives will be a new mandatory labelling system for cars based on CO2 emission levels. Requirements relating to the display of information on a car's fuel economy and CO2 emissions were introduced in 2001 on foot of an EU directive. All new passenger cars offered for sale or lease in Ireland must therefore already be accompanied by a fuel economy label that displays information on the vehicle's fuel consumption and its carbon dioxide emissions. The regulations also require the publication of a guide for consumers on the fuel economy and CO2 emissions of all makes and models of new passenger cars for sale in Ireland and that similar information be included in promotional material and advertising.

Experience has shown that the existing labelling requirements are not sufficiently consumer-friendly and that an improved design would be beneficial to car buyers. It would help in assessing the environmental impacts of various cars and would provide guidance on the purchase and running costs. I am proposing therefore that the requirements on the display of a new label be changed with effect from 1 July 2008 to coincide with the introduction of the new CO2-based motor tax and VRT systems. It is my intention that this new label will include consumer-friendly information on a vehicle's CO2 emissions, based on the seven CO2 bands. The label will be similar to the energy rating label which already exists for many consumer electrical goods and which is already familiar to consumers. The label should also include information on fuel efficiency, the amount of motor tax and the applicable rate of vehicle registration tax. I will bring forward separate legislation to give effect to these proposals.

The new labelling regime will be accompanied by an active public information campaign which will promote the purchase of fuel efficient cars. My aim is to ensure consumers are fully aware of the incentives being created through changes to the motor taxation system. This will assist them in making informed decisions. These incentives are designed to arrest the trend, evident over many years, of increasing emissions from the road transport sector. This will go some way towards Ireland's compliance with its Kyoto Protocol obligations, but will also put the country on a better footing for the more demanding targets facing us in the period up to 2020.

Deputies will be aware of the importance of motor tax to the funding of local authorities. As I said at the outset, motor tax receipts are paid directly into the local government fund which is ring-fenced exclusively for local government purposes. These receipts are supplemented on an annual basis by an Exchequer contribution. Total funding for 2007 amounts to €1.6 billion, which represents approximately 30% of local authority current funding requirements.

The fundamental changes which are contained in this Bill in terms of moving to a CO2 based motor tax regime are designed to achieve financial neutrality in the context of income to the fund. We are clearly breaking new ground with the overriding objective of progressively reducing CO2 emissions from cars. As we move forward, there will be a need to keep the new arrangements under review to ensure the environmental objective is delivered while, at the same time, protecting this important source of funding for local authorities. I commend the Bill to the House.

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