Seán Kenny (Dublin North East, Labour) | Oireachtas source

The primary purpose of this Bill is to give a permanent basis in law to the increases in motor tax rates and trade-plate licences contained in budget 2013. For licences commencing on or after 1 January 2013, flat-rate increases of between €10 and €92 apply to private vehicles taxed on the basis of carbon emissions. Rates for private electric vehicles were reduced to €120 per annum. Increases of 7.5% apply to all other vehicles. Trade-plate licences also increase by 7.5%. The Bill provides that the new rates of motor tax and fees for trade plates apply to licences taken out for periods beginning on or after 1 January 2013, and that veteran and vintage vehicles will be exempt from the new regimes.

A review of the carbon banding of vehicles for VRT and motor tax was carried out in 2012. Following the review, the lowest emitting bands A and B were broken into six separate bands for motor tax purposes, along with a further zero-band for privately owned electric vehicles.

The proposals under budget 2013 will result in an across-the-board increase of 7.5% on cars registered before 2008, meaning cars with a 2 litre engine will see the annual tax bill jump from €660 to €710. A more modest 1.4 litre car will increase from €358 to €385. The smallest cars with a 1 litre engine, such as mine, will go from €278 to €289 per annum. In pure monetary terms, it is true that cars with higher emissions will continue to see their tax bill increase, with the least eco-friendly cars seeing an increase of €92 per annum. The owners of cars with lower or no emissions will see their tax bills fall. Emission-free cars bought since 2008 or electric cars bought before then will see their tax fall by almost a quarter, to a flat rate of €120 per year.

While increased taxes on cars are required given the economic situation the country is in, I suggest that they are heading in the right direction, given that those with the most environmentally friendly cars are still required to pay less tax. People who will be looking to buy cars in the future should consider smaller cars that have smaller engines and therefore emit less carbon dioxide, help our climate and make a contribution to dealing with climate change. People should also consider purchasing electric cars where possible. I call on the manufacturers of these cars to work towards making them cheaper to own and easier to purchase than they are at present.

We should also consider the alternatives available for commuters who travel to work by car. People who avail of public transport can avail of the tax-saver commuter-ticket scheme, which was established as an incentive for the use of public transport. These public-transport commuter tickets can be availed of when travelling to work by public transport bus or rail services. The scheme extends to include Luas services and also applies where a ticket covers more than one operator, for example, an integrated ticket covering Luas, DART, Dublin Bus and Bus Éireann services. This is an incentive to encourage people to switch to public transport and reduce traffic congestion.

Employees receive tickets either as part of their salary package, in lieu of an annual cash bonus, or as a benefit-in-kind. Savings arise because tickets are not subject to tax or PRSI. Employees only have to pay tax and PRSI on the "money" portion of their salary. Employer PRSI is also calculated on the "money" portion of the employee's salary. There is a benefit to both the employee and the employer through the scheme.

Leap cards, which were introduced during the lifetime of the Government, are another incentive towards using public transport and are proving to be a huge success in their use across multiple public transport modes across Dublin. I understand that leap cards will eventually be extended for use outside Dublin, which I welcome.

Another alternative to travelling to work by private car is the cycle-to-work scheme, a tax-incentive scheme which aims to encourage employees to cycle to and from work. It also has health benefits and will help in tackling the problem of obesity. Under the scheme, employers can pay for bicycles and cycle equipment for their employees and the employee pays back through a salary-sacrifice arrangement of up to 12 months. The employee is not liable for tax, PRSI, levies or the universal social charge on his or her repayments.

Where possible, people should use public transport, particularly in cities. Where public transport is not available, I encourage the Government to examine major public transport solutions for areas that are clearly in need of such solutions, as well as previously proposed projects that have been put on ice.

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