Michael McGrath (Cork South Central, Fianna Fail)

I thank Deputy Connick for sharing his time. I commend him on the detail of his speech. It is clear he has a background in the motor industry and speaks with great knowledge on it.

I wish to address the motor tax increases, approved on 5 December 2007, and the new carbon budget and its linkage to motor tax with the move away from the old motor tax system determined on a vehicle's engine size.

While no Member would welcome a tax increase, the increases in the motor tax rate must be considered in their context. The increases will be ring-fenced for the local government fund which will improve the services provided by local authorities. These are also the first increases since 2004, the first in four years.

The Minister has proposed a 9.5% increase for cars below 2.2 litre engine size and 11% for cars with an engine size above this threshold. When communities see the benefit of the revenue generated by the local government fund, most reasonable people will understand it is worth paying the extra money. Recently, the Minister for Transport announced the regional and local roads programme for 2008, setting out an overall expenditure of €618 million. Funding for this will come from the local government fund. Motor tax proceeds in 2008 are anticipated to be €1.08 billion, a significant figure which will directly finance improvements to local government services and investment in roads.

I welcome some of the projects the fund has facilitated in the Cork South Central constituency, particularly the investment of €500,000 in the Carrigaline western relief road, €100,000 in the proposed Clarke's Hill-Moneygourney road improvement scheme and over €500,000 on the R610, Rochestown to Passage West road. I refer to these specific local projects because it is important for people to see the benefit of the motor tax they are paying. While it is easy to complain about an increase in motor tax rates, we also want to see improvements to the road network. If we can deliver those improvements in a timely and efficient manner, the majority will not be too critical of paying these increases.

Recently at the Joint Committee on Transport, the chief executive officer of the Road Safety Authority, Noel Brett, and the Garda Commissioner, Fachtna Murphy, went into some detail on road safety issues. They explained as 94% of the road network is constituted by local and regional roads, we need to continue to invest in the network to make it as safe as possible. The Minister's announcement of funding from the local government fund is particularly important in this regard.

The Bill's fundamental provision links motor taxation rates for new vehicles to CO2 emissions rather than engine size from 1 July. Engine size historically has been the determinant of motor tax but if we consider the purpose of what we are trying to achieve, it is quite a crude measure because it is CO2 that is the problem in terms of pollution and its contribution to global environmental issues such as climate change. If we consider that road transport generates 20% of CO2 emissions in the EU, with passenger cars representing more than half of this, we can begin to understand the contribution made by road-related transport to climate change. The carbon budget announced by the Minister for the Environment, Heritage and Local Government on the day following the budget in December, which is now being implemented through this Bill, will represent our contribution to solving this problem. Although this is a small country, we must play a leadership role in terms of addressing climate change. Given the contribution of CO2 emissions from road transport to environmental problems, it is important that we do this.

There has been some criticism of the Minister's decision to apply the new motor taxation system to new and pre-owned imported cars registered on or after 1 July 2008, and I note Deputy Connick's comments on linking VRT to CO2 emissions from that date and the potential impact on motor vehicle sales in 2008. It will balance out. We may well see a reduction in sales in the first half of the year compared to last year, but it is to be hoped that the second half of the year will compensate for this. There is of course a fear that some people will hold off on buying a new car until 2009, but when a fundamental change such as this is introduced, some anomalies will always be created, which will be washed out through the system over a period of time. The important thing is that we subscribe to the principle of what the Minister, Deputy Gormley, is seeking to achieve here: that as a country, we play a leading role in tackling climate change, particularly by linking motor taxation and VRT to carbon emissions rather than engine size. From 1 July motor tax for the most efficient new cars registered will start at €100, while under the current system the lowest motor tax rate is €165. Thus, there is a direct incentive for people who want to act responsibly and play their parts in tackling climate change. By buying a vehicle that is carbon efficient, people will earn a direct financial benefit.

I also welcome the new labelling system being introduced by the Minister from 1 July. It is particularly important that consumer-friendly information is available and is presented in a uniform and consistent manner to enable people to make conscious and informed decisions on the implications of this Bill for their buying patterns. I commend the Minister and thank the Ceann Comhairle for this time.

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