Ciarán Lynch (Cork South Central, Labour)

I would be out of order if I addressed the Visitors Gallery, but if I did I might explain what this tax issue is all about. We have changed from an engine-size based motor taxation system to an emission based system. We will no longer tax the size of the car but the amount of pollution it creates. This is a very positive development by any measure and is significantly welcome. Unfortunately, like that parson's egg, it has good parts and bad parts. We have witnessed a number of significant changes and adaptations to this new form of taxation since it was rolled out by the Minister. On 5 March, when the legislation was in committee, there was an expectation that the Minister would correct some of the obvious anomalies. One major anomaly was that owners of second-hand imported cars would be subject to new emissions linked tax rates while owners of second-hand cars registered in the State would be taxed under the old, more punitive scheme. If cars were imported, there would be a benefit whereas if one owned a second-hand car registered in the State, one would be on a different rate. I had an old school teacher and occasionally we used to ask whether he had any favourites and he replied, "No, I hate ye all equally". The Minister has come up with a similar response and proposed a taxation system under which everybody in the classroom in penalised.

I expected a positive response from him and that he would apply the new regime to all cars, not only to those imported. I presumed people who had made an active, responsible and deliberate choice over the past number of years to purchase an environmentally friendly car would be rewarded for their foresight and vision and for doing something that was neither fashionable nor profitable. Unfortunately, the Minister decided to park that consumer group and applied the maximum motor tax rate to them.

Since the Minister announced this Bill, we have been presented with three different versions, one more contradictory than the other. First, it was proposed that the new rates would come into operation in June 2008 with no retrospection whatsoever. It was then proposed on second thoughts that all low emissions cars registered in 2008 would opt into the new rates but those purchased in 2007 or prior to that would not. As the Bill proceeds through the House, we have been told the benefits and rate system will not be extended to buyers of imported cars. The Minister had to draw a line in the sand at some stage in this process but I cannot understand how a motorist with a low emissions car cannot avail of the either option regime.

The Minister needs to apply himself to another critical issue. When the scheme was rolled out, it threw the motor trade into a state of flux. New cars are usually bought in January and February but because it was proposed to change the motor taxation system, people put off their purchases and that led to a kink in the purchasing calendar for cars and other adjustments. One classification of car has disappeared completely off the highway — the renewable energy-based bio-fuel car. Is this no longer at the core of Green Party policy? The Minister used to raise this issue extensively. Has it been dismissed as an option that will not take priority? Has the Government sought to disincentivise this approach or will it introduce incentives down the line for such cars?

Manufacturers such as Ford, Saab, Opel, Mazda or Toyota are making bio-fuel cars and selling them to customers. It is unfair of the Minister not to tell people who purchased such cars earlier this year where they stand in the context of motor taxation and whether an incentive will be provided down the line. Will the driver of a bioethanol fuelled car be in the same classification as a driver of a petrol car? I acknowledge the emissions are similar and the environmental argument can be made regarding the manufacturing process but a clear answer is required of the Minister in this regard. If one drove between Cork and Dublin, one would be unable to buy a litre of bioethanol. Has the Minister disincentivised the purchase of these cars in the market? Such cars were more widely available 18 months ago. What is the Minister's position on this fuel?

When the Bill was first introduced, it was pointed out that there would be roll-out problems but not ensuring retrospection and a benefit for second-hand buyers is an issue. We have moved on but that issue has not been addressed. An opportunity was presented to set a precedent for other measures down the line.

The revenue raising versus environmental argument is also an issue. Like any taxation system, one must question what are the motivational factors behind it and whether it provides a revenue driven incentive or an environmentally driven incentive. Perhaps it is both but there are difficulties in the case of it being a revenue driven exercise if current sales of cars are to be taken into account. For example, while the principle of taxing cars on the basis of CO2 emissions is sound, there is an economic problem because it is a moving target. According to Department of Finance briefing notes, 64.29% of all cars sold in 2005 produced between 146g and 190g of CO2 per kilometre, 13.73% were in the high pollution category producing more than 190g and only 3.85% were in the low category producing less then 125g. However, this will change. The EU has agreed with car makers to target a reduction in emissions in all new cars to an average of 130g per kilometre by 2012 with the effects of other technologies reducing the overall score to 120g. Cleaner and greener fuels will also play a role and there will be continued pressure to push this figure lower as manufacturing methods improve.

The Minister made great play in his opening contribution about raising €40 million for the local government fund, which is also mentioned in the explanatory memorandum. If emission levels reduce in years to come through car manufacturing design, tax revenue will also reduce as sure as night follows day. The Minister cannot brag that this will be a funding source for local government because it will not be. This comes back to the environmental versus revenue raising argument. If this an environmental measure, it cannot be used as a revenue raising measure. This is not a win-win situation. The intention is to reduce emissions to the lowest level possible and, therefore, the Minister is being disingenuous by making that argument.

Hybrid and low emission cars comprise less than 5% of the existing fleet of cars in Ireland. It is reckoned that within ten years 60% of motorists will drive diesel cars, given the incentive provided in the budget. We will shift from being a petroleum car owning population to a diesel car owning population and emissions will reduce but hybrid cars and so on will come on the market. I welcome what the Minister is doing. It is a philosophical change in culture as well as involving a logical argument that we move the taxation system to a polluter pays principle in the case of car tax. However, this can only be considered as the first phase of this type of taxation and the first phase of dealing with emissions from cars.

To restate the point I made to the Minister earlier, under no circumstances in the long term can this be considered as some sort of concurrent funding project for local government. If it is to be successful, the graph for tax revenue from this year should show a drop of income because more cars with low emissions will be bought, which is as sure as night follows day. The Minister should not come to the House to tell us he will give us €40 million for local government.

While I had not intended speaking about the following point, the Minister raised other issues relating to local government, including the tax raised on non-principal residences. I will leave for another day the issue of how he will explain how he will identify these residences and whether it will be through the register of electors, which is wildly inaccurate. A very comprehensive and well received report from the Select Committee on the Environment, Heritage and Local Government is still lying on the Minister's desk. If it is a case that this will be done through the register of electors, I do not know how it will work and I would be interested to know how the Minister will target those he wishes to contribute to the revenue base.

Deputy Bannon referred to the water table. The manufacturing companies that produce sewerage systems and water treatment systems attended the committee this week. I am not sure whether the Minister was otherwise detained or whether he was able to watch on this monitor the very interesting discussion that took place at the committee. Given what is happening at another committee of the House this morning, and what is happening with regard to the banks and other committees, it was unusual that a business representative organisation representing a whole series of manufacturers in this area came in to the committee screaming to be regulated. Usually, it is the other way around, and when people come before committees, it is the committees which are trying to place regulation upon them. This organisation demanded to be regulated. What was surprising about its request is that all the measures required for these businesses to be regulated have been with the Minister's office for the past four years. While I am not suggesting the Minister created this problem, the answer to it is currently within the Minister's office.

What was most profound about what the representative organisation had to say was that, by its estimation, 50% of sewerage systems in the country are not working because of improper installation and the absence of guidelines for installing such systems. A simple thought struck me on listening to this. If one were building a house in the morning, one would obviously have to install an electricity supply, and if one was using gas for cooking or heating, one would have to install a gas supply. If one has electricity coming into a house, a RECI certificate must be issued. There is grading of the skills certificates for plumbers with regard to who can actually turn on the gas coming into a house. It would not necessarily be any plumber who can set a washing machine because a plumber must have specific certification for dealing with gas plumbing. Yet, it would seem any old Joe the plumber, or perhaps Padraig the plumber, can arrive at a house site with no certification or qualifications, bang in one of these systems and then take off down the road on his rothar and disappear over the horizon.

This is an issue to which a solution is actually on the Minister's desk at present. I do not accuse him of sitting on it because he may not even be aware the information is there, such is the extent of his Department. However, I flag with him that he should go over the report of this week's committee meeting to learn what was presented. On occasion, the Minister invites comments from this side of the House, and these would be helpful to him. The information from this week's committee meeting would be extremely helpful to the Minister if he were to listen to what was said and take action on it. It is an opportunity to do something positive and to deal with an issue that has been nesting in his Department, perhaps unknown to him, for quite a while.

I will conclude by restating my opening points. The Labour Party will be supporting this Bill. We regret that the Minister in conceiving this new legislation ran into so many difficulties with regard to what could have been opportunities, particularly concerning the absence of retrospection and dealing in some sort of equitable manner with people who bought second hand cars prior to the change in the taxation system. However, the Bill is in essence positive. It moves us away from taxation of a motor car on the basis on engine size towards a polluter pays policy. The Labour Party will support the Bill.

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