Thomas Pringle (Donegal South West, Independent)

I welcome the opportunity to contribute to the debate on the Motor Vehicle (Duties and Licences) Bill 2012.

The Bill implements the increases in car tax announced on budget day which are intended to raise an extra €46.5 million in revenue during the year. The increases in car tax will be difficult for people in a number of ways. There are huge tax increases in relation to CO2 emissions from vehicles. Changes range from 7% to 54%, depending on the band of the vehicle. The main changes on the A and B bands are 54% and 44% respectively. This is a betrayal of the people who, luckily for themselves, were in a position to purchase a vehicle since 2008 and avail of the lower tax rates on cars with lower CO2 emissions. They felt they were contributing to an environmental improvement by purchasing and using a vehicle that had lower emissions. There was a reward for contributing to an overall reduction in carbon dioxide emissions.

The increase of 7.5% across the board on all private vehicles is a regressive step. It penalises people who were not in a position to purchase newer vehicles in recent years and who, through no fault of their own and particularly in rural areas where there is no public transport, depend on the car to look for work and stay in work. An increase of 7.5% is a huge burden on those people.

People who purchased diesel cars because they were more economical to run will see significant increases in their motor tax because of the implementation of the Bill.

People are right to feel a sense of betrayal. The Minister spoke about the need to maintain a diversified and stable taxation system and said the loss of taxation income represents an opportunity cost that must be rectified. It is unfair for the Government to look for opportunities to generate more funding and to squeeze more out of hard pressed people who are dependant on cars in their daily lives. The Bill will place a huge burden on them.

Even more galling is the fact that the increased revenue generated will go straight to paying off the national debt. The €46 million raised by these taxation measures will make little difference to the more than €80 billion worth of debt, or even to this year's interest payments. It is a mere drop in the ocean.

This also represents a betrayal of the local government fund. Since 1997, revenue from car tax has been ring-fenced for the local government fund, providing much needed funding to local authorities. These increases will go towards writing down debt. We expect further increases over the next couple of years, solely to write down our debt to the IMF the ECB and the European Commission. It sticks in the people's throats. They see the real reason behind this increase in motor tax as solely being to deal with that debt. It is not to increase revenue or services, to copperfasten any reductions in carbon dioxide emissions or to further develop the system. It is only to hand back to the troika and ensure it is kept happy by the €46.5 million that will be generated this year from the increase. That will surely make an impact on the €4.5 billion in interest payments alone this year on our debt.

I suppose it shows the level to which the troika and the Government are prepared to go to squeeze extra money out of people who are already suffering in terms of the household tax, the septic tank charge, the universal social charge, cuts in wages, unemployment and cuts in social welfare. It is a slap in the face for people to see that this €46 million will merely be transferred directly to the troika. For that reason, the amendment the Minister proposes to bring forward to alter the Local Government Act to allow for this money to be transferred directly to the Exchequer should be opposed.

There has been a cut in local government funding already this year. It was announced on budget day that it will be reduced by €173 million, not €164 million as the Minister outlined in his speech. It shows that there will be further cuts in local government services. The argument that paying charges helps to increase and support services does not stand up because there will be further cuts in the services available through local authorities in order that money can be passed back to the troika to fund the totally unsustainable debt.

See this speech in context