Martin Ferris (Kerry North, Sinn Fein)

Sinn Féin supports measures taken to encourage the use of vehicles with lower CO2 emissions and was calling for that for some time before the Government decided to act. Nonetheless, any steps in this direction are to be welcomed.

Encouraging people to use vehicles with lower emissions is an important aspect of any strategy to reduce carbon emissions. The objective of the new tax rates with progressively higher rates for the larger vehicles is to encourage people to buy vehicles with lower emissions and, by extension, reduce the sales of larger vehicles such as sport utility vehicles, SUVs.

Interestingly, because the increases were well signalled last year and perhaps with the confidence that the new tax rates would apply to new sales, the sales of SUVs here comprised the biggest increase in car sales in this State in the first half of 2007, with a rise in market share from 5.6% in 2006 to 6.8% in 2007. Sales of SUVs increased by 29.6% compared to the same period in 2006. That increase must, to a certain extent, have offset whatever benefits were to be achieved by the CO2 tax that was, as I said, already well signalled. Much has changed in the meantime and the economic downturn has resulted in a significant fall in car sales here. New car sales were down 50% in May. Some of that fall has been attributed to the VRT and tax changes which came in on 1 July.

There was some speculation that the market would pick up significantly after 1 July with people moving towards lower taxed vehicles but the figures for last month showed that this country had the biggest falls in sales in the EU at 54.6%. That represents a more than 18% decline on the first ten months of 2007. The number of second hand cars licensed during the same period increased by 4%. It would appear then that the recession is playing a far greater role than anything to do with tax and that the reduction in car traffic is a symptom of economic difficulties and rising unemployment rather than anything to do with the environment or the carbon budget.

On the other hand, there is evidence that people are increasingly aware of the importance of reducing emissions and of their role in this regard. This has led to an increase in the share of new vehicles by those with the lowest emissions. These accounted for almost 10% of new sales in 2006 while the second lowest category of vehicles accounted for another 22% of sales. Tax incentives for vehicles with lower carbon emissions have increased that trend.

There is also an argument that tax on lower emission vehicles might have been frozen while any shortfall would be made up by even higher taxes on those with much higher emissions. Some have argued that because of the price involved, the disincentive to buy the larger vehicles is perhaps not as great as imagined. That factor may be lessened by the current downturn. Unfortunately even the most optimistic projections regarding the reduction of CO2 emissions accept that measures designed to reduce vehicle omissions will make only a small contribution to the overall target of reducing carbon emissions in this country.

Sinn Féin believes the major focus for tackling emissions from motor vehicles ought to be improving and increasing the use of public transport. If there was a better funded and more efficient public transport system, there would not be the same incentive for so many people to drive to work or use their cars at other times. There have been some small successes on this, with the Luas in Dublin for example, but there needs to be a much broader approach if large numbers of people are to be persuaded to leave the car at home. If that were to happen, there would be far more significant reductions in carbon emissions than anything possible through changes in vehicle taxation.

The major incentive to increase public transport as part of any strategy to reduce carbon emissions is found in the extremely small part which the sector currently has in creating emissions. In 2006, this stood at just 4.1% of the total emissions in this State, which was reduced from 5.3% in 1990, with the fall accounted for by a reduction in rail transport emissions. Emissions from private cars on the other hand accounted for almost 37% in 2006, although that, too, was down from 1990 mainly due to greater fuel efficiency despite the fact that car ownership had greatly increased over the same period. The overall share of emissions caused by transport had risen to 35%. Any increase in public transport use would have a significant positive effect on the level of emissions and, on that ground alone, apart from any other social benefits, would be well worth the increased investment.

Even with these reductions in CO2 emissions from transport vehicles, there is little optimism that the current strategy to achieve the 2020 reduction targets will be successful. Professor Richard Tol of the ESRI has claimed, for example, that the 3% annual reduction up to that date would be reached only with a doubling of the price of petrol and a trebling of the price of electricity. The questions that must be posed are whether the strategy is focused on the right targets and whether attaining the target would be worth the severe impact of the sort of measures referred to by Professor Tol.

While the increased tax receipts from road vehicles will be paid into the local government fund, there is a good deal of dissatisfaction around the country among members of local authorities regarding their finances. This is a consequence of the measures taken in the recent budget which entail the reduction in funding for local government. Local authorities have been advised that their wage bill alone must be reduced by 3%. The overall impact on local authorities will be to force them to reduce the range and quality of services they provide and this will have a detrimental impact on communities throughout the State. The Acting Chairman, Deputy Neville, and I had a conversation earlier and we have all-party agreement that the roll-out of the electric car should be to Athea and Knocknagashel.

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