Willie Penrose (Longford-Westmeath, Labour)

I thank Deputy Maloney for raising this issue, which I know is important to him. As he is aware, the general scheme of a motor tax Bill is currently being prepared in the Department, but this does not include plans to abolish the current system of motor tax in favour of one that places additional taxation on motor fuel. The change in policy suggested would have significant implications across a number of headings, and would require major consideration. I can deal with only a few of these headings in the time available.

First, the maintenance of the tax base would require a substantial increase in excise rates of at least 20 cent per litre. The impacts on inflation would be significant at a time when Government needs to drive down prices across the economy to maintain competitiveness. The impacts on different categories of drivers - urban, rural, commercial, business, private and so on - would need to be understood. Goods vehicles make up 13% of the national fleet, and these, together with public service vehicles and buses, are high usage and high mileage vehicles, which would have higher costs under a pay-as-you-drive system. The potential impacts on business competitiveness are clear.

The proceeds from motor tax are the main element of the local government fund. This fund is used predominantly to meet general purpose requirements of local authorities and to support the maintenance and development of non-national roads. Motor tax receipts in 2010 were some €1 billion and abandonment of motor tax would require a new source of income for local authorities of this order.

A significant increase in fuel duty would lead to an increase in cross-Border fuel purchasing, further depressing the tax base and requiring compensatory adjustments elsewhere to make up the shortfall. The potential for an increase in fuel laundering is also clear.

We must maintain a robust and accurate national vehicle and driver file to ensure compliance with roadworthiness testing, insurance certification and other traffic controls such as penalty points and fixed charge offences. In the absence of drivers paying motor tax, alternative ways to maintain the national vehicle and driver file would have to be found and costed. I do not believe an alternative system could be as effective as the current system.

All in all, the potential benefits which Deputy Maloney has identified would have to be weighed against these issues, and many others, before any change of the kind proposed by him could be contemplated.

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