Michael Noonan (Limerick East, Fine Gael)

The Bill has two purposes. The first objective is to increase motor tax, which was the purpose of the Financial Resolution passed on budget night on 5 December. The Bill simply gives effect to that. I cannot welcome that portion of the Bill. It is just a tax measure, which increases motor tax by an amount far in excess of the rate of inflation. What happened was quite clear. During the Estimates campaign, conducted by the Minister for Finance, there was a shortage of money in the Department of the Environment, Heritage and Local Government. After the required cuts were made, the Minister was allowed by the Minister for Finance to recover money lost in the Estimates campaign by increasing motor tax.

He increased the tax on cars of less than 2.5 litre by 9.5% and he increased the tax on cars of more than 2.5 litre by 11%. According to the Minister for Finance the projected rate of inflation for 2008 is 3.5%, which means that the increase for cars more than 2.5 litre is three times the rate of inflation and the increase for cars less than 2.5 litre is 2.5 times the rate of inflation. This is purely a tax collection measure that has nothing to do with green policies or protecting the environment. There is a nod in that direction by having a 2% differential between the greater than 2.5 litre cars and the less than 2.5 litre cars. That 2% will make no difference in customer practice or in people purchasing cars. They will not change their minds about what they want for the sake of a 2% differential in the increase in car tax.

The Minister knew what he was doing and on his own figures he will collect €83 million in a full year on this measure. That is just a tax increase, cleverly signed off by the Minister for Finance into the remit of the Minister or the Environment, Heritage and Local Government. We have the novel thing, a carbon budget, in which the Minister for the Environment, Heritage and Local Government was allowed the privilege of announcing an €83 million imposition on the private motorist the day after the budget. It is an unfair tax increase, which when considered with all the other costs of motoring, is a heavy burden on taxpayers. I resent that it is being presented as some kind of environmental measure — it is not. It is just a way to collect tax.

Yesterday the price of oil exceeded $100 again. There is no doubt that this will be followed by significant increase at the pumps. Cars are expensive. Car tax is expensive. VRT is expensive. Petrol and diesel are expensive, and tolls are becoming increasingly expensive. One of the anomalies of Government policy is that the more disadvantaged areas of the country with less economic growth will be the areas with the highest frequency of tolls on roads. That is perverse and should not happen. It happened because the roads were priority listed. At the top of the list were the roads to be funded by the public capital programme and consequently had no tolls applied. Further down the roads programme list were roads that could only be constructed with a private sector involvement.

In my and Deputy Breen's part of the country we will be paying tolls to travel under the Shannon in the Shannon tunnel through which we hope to be driving in two years' time. However, if I were in Cork I could drive through the Jack Lynch Tunnel as many times a day as I liked free of charge. Many people living on my side of the river work in Deputy Breen's constituency at Shannon Airport. They will be paying the tolls at least twice a day. Many others living on Deputy Breen's side of the river in the Caherdavin area work in the Raheen Industrial Estate and go home for lunch. They would pay four tolls a day if they are not to jam up the traffic in the city centre as is happening at present.

When the other project in our area is completed, the road from Limerick to Nenagh, it will also have a toll. When it links with the motorway from Castletown near Portlaoise we will have another toll to get to Portlaoise. Drivers will be able to travel from the economically advantaged part of the country, from Dublin to Portlaoise, without paying any toll. However, those driving from west of the Shannon, through Limerick and up to Portlaoise will need to pay two tolls, one to get under the Shannon and another after reaching Annacotty on the way up from Nenagh to Portlaoise. One might say these are small impositions on the private motorist and while they add to the cost of motoring they do not influence the terms of competition or trade. They are a major imposition on the carriage of freight, however, and make our part of the country uncompetitive. I would like this matter to be re-examined.

I welcome the Bill's second proposal. It is not before time that car tax moved from the basis of engine capacity to emissions. While it is a good measure, it is a pity that it simply borrows the UK system without looking at local conditions or attempting to remove anomalies. Under the terms of the Bill, a low-emission car imported from Britain or Northern Ireland will have a lower road tax than a car of the same model and year that is being driven around the roads of Ireland at present or that is bought secondhand off the forecourt. In the long term, it is not feasible to have two different tax regimes for the same cars with the same emissions and same year of purchase. The market will decide the issue because low-emission cars will be brought in from the United Kingdom, whereas high emission cars will not. The first problem will be that low-emission cars on Irish forecourts will not be sold and will therefore decrease in value. As low and high-emission cars lose value it probably will not have any influence in the long term on customer choice, which was promulgated by the Minister as the primary purpose of this Bill — that is, to influence the choice exercised by motorists when purchasing new cars.

My final point concerns the general VRT issue, which I mentioned before. According to a schedule published in The Irish Times the car I drive, which is a BMW 320 diesel, would carry a VRT rate of approximately €12,900 before the changes are introduced. After the changes, if it were a new car, the VRT rate would be reduced to approximately €6,800. I am driving a green car but according to the Minister's proposals the value of my car will fall by approximately €6,000 from 1 July 2008. I might recover that if I were to exchange like with like on a trade-in, but if I change models and want to buy something else the trade-in value of my low-emission car will go down. I will be penalised further because under the new schedule it will carry a lower car tax after 1 July if it is a new car, but because it is secondhand I will not get the advantage of the lower tax. I will, therefore, be paying a higher rate of tax than a person who imports a 2004 BMW 320 diesel from the United Kingdom. That is anomalous, unfair and should not happen. The Minister and his departmental advisers need to reconsider the matter in order to remove those anomalies from the system.

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