Johnny Brady (Meath West, Fianna Fail)

The Bill we are debating provides a permanent legislative basis for the motor tax increases approved by the Dáil on budget day. The Financial Resolutions provide for increases of 4% for cars below 2.5 litres and CO2 bands A to D and 5% for cars above the 2.5 litre threshold and CO2 bands E, F and G. A 4% increase also applies to goods and other vehicles, with no increase for electric vehicles. Trade plate licences will also increase by 4%. The new rates will apply to motor tax discs and trade licences taken out for periods beginning on or after 1 January 2009. It has been estimated that the increases will generate additional revenue of approximately €40 million in a full year.

This Bill also provides statutory effect to the new CO2 based motor tax system for new and pre-owned imported cars registered on or after 1 July 2008, which the Minister announced in his carbon budget of December last year. This new motor tax system complements the new CO2 based vehicle registration tax system provided in the Finance Bill 2008.

The increased revenue that will result from this Bill will be paid into the local government fund, a point which is important to note. Since the establishment of the local government fund in January 1999, all motor tax receipts are paid into the fund. In addition to the proceeds of motor taxation, the fund is also supplemented by an Exchequer contribution. The fund is ring fenced exclusively for local authority purposes and is distributed to local authorities as discretionary grants in respect of day-to-day spending requirements, and also as grants in respect of expenditure on local and regional roads.

I read in the Minister's speech that in total local authorities will spend €11.7 billion on capital and current expenditure in 2009. A total of €1.6 billion will be available for allocation via the local government fund for general purpose grants. I would like to comment on a point made by my colleague, Deputy Fitzpatrick. There are many major routes and motorways under construction. Many older roads are being downgraded from national primary and national secondary routes to regional roads. This will cost local authorities a great deal of money. I am pleased that the Minister of State at the Department of Transport, Deputy Noel Ahern, is in the House and that my constituency colleague, Deputy Noel Dempsey, is the Minister for Transport and I compliment them on their great work to date.

It is pleasing to see great roads under construction. Let us consider the M1 motorway which is being upgraded at great cost. Next year we will hopefully see the opening of the famous M3 motorway, about which we have all read and heard over many years. I thank God for the people of Kells and those in the entire north County Meath area, including Navan, Dunshaughlin and stretching up to counties Cavan and Fermanagh and Donegal all of whom may avail of this road when it is completed. I am conscious of how the people and traders of my town have suffered through the years because of the through traffic. Not only is there traffic passing through Kells coming from Cavan, Donegal and the North, but the N52 route also passes through the town, which brings heavy traffic from the North to the south and west. I thank the Minister, Deputy Dempsey, for ensuring the completion of the N52 bypass of the town of Kells.

My colleague referred to public transport and we are very lucky to have such a great public transport service from the town of Kells to Dublin. There are buses leaving the town for Dublin from 6 a.m. every 15 minutes until 9 a.m. and the reverse is the case in the evenings. I believe there are similar services in all such towns, and my friend from County Louth, Deputy Fergus O'Dowd, may confirm that the same is happening in Drogheda and other areas. It is satisfying to see all of these achievements.

The Bill provides for new rates of motor tax and fees for trade plates. It takes account of changes to the various taxation classes and provides coherence for the definition of carbon dioxide emissions. This week European Union governments moved closer towards a deal on cutting greenhouse gas emissions from cars. The planned legislation must strike the right balance between environmental concerns and the needs of the car industry, which has been hit hard by a global economic downturn. In my town and throughout the county many jobs have been lost in that sector. A significant number of people have been employed in this sector over many years and unfortunately many are now losing their jobs because of the downturn in the economy.

Ambassadors of the European Union's 27 governments agreed to cut average carbon dioxide emissions from new cars by approximately 18% to 130g per kilometre, beginning from 2012. This would reduce auto manufacturers' output and there will be full compliance in place by 2015. There was agreement on a phased-in approach to cut carbon dioxide emissions. However, some countries wanted a higher initial level and others a lower initial level. EU envoys failed to agree on fines for companies exceeding the allowed emissions. Any deal needs to be backed by the parliament before becoming law. Governments agreed in principle on an ambitious goal to slash carbon dioxide emissions from cars to 95g per kilometre by 2020. I understand that some small car makers might be temporarily exempted from general rules under the deal.

I welcome the labelling system showing consumers how much vehicle registration tax, VRT, and motor tax they will pay on new cars. Any initiative to encourage motorists to purchase cars with lower carbon dioxide emissions is to be welcomed. The aim of the changes to VRT and motor tax is to persuade consumers to purchase cars with lower carbon emissions. As part of the strategy, seven bands of emissions were created, which have determined the amount of tax the purchaser of a new car should pay as of 1 July last. If one buys a car in the first low emissions category, motor tax is €100. However, if one buys a heavy fuel use car in band seven, one can expect to spend €2,000 each year. This is a sizable difference and it should encourage purchasing of greener vehicles. I am pleased to say that the system has been introduced with the active co-operation of the motor industry.

This is all part of a larger picture to combat global warming. Global warming has become one of the major topics on the global political agenda. If we do not take action, climate change will cause increasingly costly damage and disrupt the functioning of the natural environment, with knock-on effects for the supply of food, water, raw materials and other vital resources. In Ireland, for example, the Environmental Protection Agency predicts that up to 300 square km of Irish coastal land could be inundated with water, with densely populated areas such as parts of Dublin, Cork, Limerick and Galway all vulnerable.

Wealthy countries such as Ireland and its EU partners will find it very difficult to cope with the economic costs of climate change. However, more severe problems will be faced by developing countries. Global warming has the potential to cause massive upheaval and humanitarian disasters in poorer parts of the world. The Bill is a small but significant element in the battle against climate change. I support it, and believe that it emphasises how we all have a part to play in improving our environment.

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