Barry Cowen (Laois-Offaly, Fianna Fail) | Oireachtas source

Ordinary motorists who are already struggling with increased fuel costs have been hit by significant increases affecting all 1.359 million motor owning households in the country. These increases in the Bill to give effect to the changes announced in the budget are expected to yield an additional €100 million yearly. The choice to buy clean and green vehicles has been hit with further increases on top of last year's hikes. The purchaser of a band A car has seen hikes of almost €100 since 2011 in their tax while band B cars have seen an increase of up to €130. The average rates of motor tax will be €315 for vehicles based on CO2 emissions compared with €512 for cars taxed on the basis of engine capacity. These costs are disproportionately borne by those motorists who in good faith availed of incentives to buy low CO2 emission vehicles in the past.

We believe that we must have a motor taxation system that is not simply a revenue grab by the Government. There must be fair, transparent and predictable motor taxation frameworks which incentivise families to purchase environmentally friendly cars and provide a stable revenue base for Government. The continued targeting of environmentally friendly cars on top of last year's changes is a regressive move by Government that cannot be defended on purely revenue-based grounds.

In our pre-budget submission we earmarked an overhaul of the motor taxation system that would also yield a €100 million increase but not rescind the environmental platform that we built up while in government. Our vision for the motor taxation regime is one that recognises the fact that motorists contribute around €4 billion to the Exchequer through taxation, VAT and excise duty. They need a fair and transparent system that allows them to make long-term decisions on car purchases without the fear that the Government will hike up their taxes in the near future.

The decision to incentivise low CO₂emission vehicles is having a real impact on Ireland's efforts to contribute to tackling climate change. A total of 88% of new vehicles registered since 2008 are in the A to C bands, as motorists have responded to the incentives and switched from high-emission cars to low CO₂emission vehicles. The switch was made on the basis of the financial incentives provided. The Government is now further jeopardising that progress. The connection between the rate of tax one pays and the CO₂emissions from one's car was at the heart of the introduction of the CO₂ based bands in 2008. It ensured a link in the motorist's mind between driving an environmentally friendly car and paying a low motor tax rate. This Bill obviously further erodes that connection. It downgrades the importance of environmentally sound practices at the heart of broader public policy.

The measures designed to incentivise clean and fuel-efficient cars were a direct response to the growing threat of climate change as laid out in detail in the seminal Stern report. Unabated climate change could cost the world at least 5% of GDP each year. If more dramatic predictions come to pass, the cost could be more than 20% of GDP per annum. The cost of reducing emissions could be limited to around 1% of global GDP and people could be charged more for carbon-intensive goods. What we do now can only have a limited effect on the climate over the next 40 to 50 years but what we do in the next ten to 20 years can have a profound effect on the climate in the second half of this century.

A recent Eurobarometer survey found that the issue that Irish people ranked as being "most important" to them personally was the cost of living, which was ranked highest by 44% of respondents. Car sales dropped by 12.5% last year, illustrating the challenges the motor industry faces, which this Bill will only serve to worsen. How seriously can we take future promises on incentivising environmentally friendly purchases when previous commitments are not being honoured? Rising fuel prices in recent years are a growing concern for motorists and these motor tax increases further hit already hard-pressed households. Fears about the potential impact of the Iranian embargo and the volatile situation in the Middle East, exacerbated by the euro crisis, mean that the €2 barrier for a litre of petrol could potentially be breached this year. The proposed tax increases further penalise motorists on top of these broader global developments.

The assessment of those involved in the industry is quite clear. AA Ireland stated the following:

There is no way to dress it up: the car tax increase announced today will push up the cost of living for car owners affecting almost every household in the country. For vehicles bought from next year onwards there is some justification for an increase or fairly soon every car on the road will be tax band A, such is the progress being made on emissions. However for the cars already on the road this is a tax increase, pure and simple.

In addition, Mr. Conor Faughnan, director of consumer affairs with AA Ireland, said:

Drivers of older vehicles will feel harshly treated. Those pre-2008 cars are already highly taxed and they are not luxuries; in many cases ordinary motorists can barely afford to keep them on the road. For anyone who bought a low-emission car on a low tax promise, this is the day when that promise was broken. It is clearly an act of bad faith affecting over 300,000 motorists who believed the promise and bought a cleaner-greener car in the last four years.

The Society of the Irish Motor Industry, SIMI, stated that the "motorist is already paying enough tax to be on the road and new car sales are down 10,000 on last year. We have always said that more tax would be generated from increasing the sale of cars rather than increasing taxation".

My party is opposed to the Motor Vehicle (Duties and Licences) Bill. It marks a continued Government attack on motorists struggling to make ends meet, with rising living costs betraying the incentives set out in 2008 to purchase environmentally friendly cars. The financial incentives put in place in July 2008 to encourage drivers to switch to fuel-efficient cars with low CO₂emissions were a core feature of efforts to tackle climate change. This Bill exacerbates last year's increases and further erodes the progress made in placing environmental concerns at the heart of public policy. It penalises those motorists who took the decision to use environmentally friendly cars by shifting the goal posts in the middle of the game.

I wish to focus on the Minister's comment to the effect that the bulk of road tax will go back to local authorities. It is important to remember that the road tax take is diminishing. The provisions to be enacted next week on the property tax will also form the basis for the funding of local authorities. The Minister expects to obtain a specific amount of money from these measures but in the event of him not achieving his targets, can he say today that local authorities will be subvented? Can he assure the House that they will not be penalised in the way they were last year for the failures vis-à-visthe household charge, despite the inadequacy of the preparations put in place prior to the authorities collecting that charge? Let us look at the various forms of income for local authorities. The road tax take will be down, the property tax may not meet the Minister's expectations, commercial rates will definitely be down, as will development charges and planning fees, and any other income streams for the local authorities will be insignificant, whether they be library fines, fire service charges and so forth. That being the case, will we see a further erosion of funding to local authorities?

I am particularly conscious, in this debate, of the difficulties local authorities are facing in terms of their road maintenance and restoration programmes. We all know of the progress that was made on the national primary routes throughout the country in the past number of years. We also know that there has been much progress with regard to many secondary roads. In recent years, however, with the fall in the level of funding being provided to local authorities for basic road maintenance, let alone restoration or resurfacing, the detrimental effects on our road infrastructure are becoming very evident. This is particularly true with regard to non-national, county and local roads. Some of my constituents have turned up at my advice clinics with invoices for repairs to their cars. I know from talking to councillors that this is the most pressing issue in my local authority area. Will the Minister give a commitment to address this? Will he carry out an audit across the local authority system? The situation is reaching crisis point. What procedures will the Minister put in place to address this? How can local authorities access funding to address these problems? In County Offaly, for example, 40% of the roads have a peat foundation, which is not the case with the roads in many other counties. Obviously, the maintenance and restoration costs associated with peat-based roads are higher than with other roads.

What equalisation process can be put in place by directing centralised funds to local authorities? Could the fund from the road tax take be used? Has the Minister devised a mechanism to address this issue, which is now approaching crisis point? In Athboy, for example, a St. Patrick's Day parade cannot take place because of the state of the road in the town. This is merely the tip of an iceberg that is coming towards us. It is incumbent on the Minister to give a commitment to the House, in the context of the Bill which continues the practice of using income from motor taxation to fund roads throughout the country, to consult the relevant authorities throughout the country, assess the situation nationally and devise a mechanism by which this issue can be tackled as soon as possible in order to stop the rot. There must be a constructive effort to address this issue and the means provided to do so. There must be a greater and fairer distribution of resources to those who need them most.

I use County Offaly as an example. Roads in that county are affected by their peat foundations. Other counties are affected by excessive rainfall, development or sand pits. In some cases planning requirements are not adhered to and there are poor enforcement regimes, leading to poor road conditions. Improvements in these areas must form part of the overall solution. A solution must be proposed, debated and agreed very soon before matters get out of hand, because we are at crisis point.

Fianna Fáil agree that savings need to be made, but we do not believe this can be done simply by increasing tax and regressing the progress on low CO2 emissions in recent years. That progress will be negated by what was done last year and by what is proposed in the Bill

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