Fergus O'Dowd (Louth, Fine Gael) | Oireachtas source

I thank the Deputies for their comments and views. I should first point out that the amendments tabled by Deputies Catherine Murphy and Dessie Ellis were ruled out of order not by the Department but by this House. I am happy to debate the issues. While they cannot be put before the House by way of amendment, they can be debated in the context of our discussion.

I note that Deputy Murphy is opposed to the increases that took effect from January 2013 on the grounds that the moneys being raised will go to the Exchequer rather than the Local Government Fund. Ensuring sustainable funding for local authorities is a priority for this Government. We are progressing the introduction of the local property tax as part of this process. This will, in time, become an important element of funding for local authorities. Nevertheless, the local property tax will not be the only source of funding. We need to ensure a robust and predictable source of additional funding for the Local Government Fund. Motor tax is the source of this funding. It is an unavoidable fact that the new CO2-based system of motor tax introduced in July 2008 by the previous Government is working, that more people are buying cars that pollute less and that manufacturers are reducing the CO2 emissions of cars, all of which have resulted in less income receipts.

There is nothing in this Bill that alters the fact that the lower the carbon emissions of a vehicle the lower the motor tax applicable and the higher the carbon emissions the more one pays. The amount collected has fallen significantly and it is predicted it will decrease by more than 50% over the next 15 years. If we do not make these adjustments, the tax base in 15 years' time will have shrunk by 50%. In other words, the number of cars with low emissions will have increased, resulting in lower receipts from motor tax. This means there would be no funding available to maintain our roads, about which the Deputies have expressed concern. The switch was not revenue-neutral. In other words, while the initiative was good for the environment, it resulted in a loss of income for the Exchequer. Everybody accepts that the lower the emissions from cars the better for our environment and for society. As a result of this loss of income we must increase motor tax rates, albeit proportionally between vehicles with lower and higher emissions.

Every year since 2008 there has been a year-on-year reduction in income related to this changeover. It went from a high of €1.06 billion in 2008 to €1.01 billion in 2011. In the absence of the budget last year, motor tax income would have been in the region of €954 million, a reduction of 5.5%, and would have continued to decline. Without these proposed rebalancing measures, the downward trend will continue as the proportion of vehicles taxed on CO2 emissions increases. Last year, for the first time, the majority of new registrations were in the lowest tax band. This trend is expected to continue in future years. It is unsustainable to operate on the basis that an increasing majority of cars will be taxed at the lowest level, leaving us in a worse financial position. Accordingly, a rejection of the increase announced in the budget would result in a worsening of the local authority funding structure over time and the environmental inadequacy of the lower tax band would become entrenched. On both counts, this would not be responsible and would damage the local authority system that Deputies are seeking to protect.

The fact that a maximum of €150 million will be taken from motor tax receipts this year has been the subject of much comment today. It was also the subject of comment in the clear, concise and transparent budget statement by the Minister for Finance, Deputy Noonan. Notwithstanding the concerns expressed by Deputies, there has been no secrecy about it. The proposal was set out in the Minister's budget speech, which was available, as it should be, for all Deputies to read. There has been transparency in regard to what is proposed.

As stated by Deputy Pringle, €46.5 million was transferred last year from the Local Government Fund to the Exchequer in a transparent process. In other words, it was announced and was done. What is proposed for this year is applicable to this year only. I accept that this money is being used to write off national debt. We are in exceptional times. We are spending €1 billion more per month than what is being taken in. Notwithstanding all the points made-----

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