Eamonn Maloney (Dublin South West, Labour)
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I ask the Minister to undertake a review of the present system for the collection of motor tax, which I argue is an antiquated one. Given the current financial environment, every Department, as well as every legislator, is conscious of the need to become more financially efficient. I would argue that the collection of motor tax by the State in its present form is the most inefficient and expensive way of doing this that could be, which is why I ask the Minister to review it.

When one considers the methodology of motor tax collection, people drive to their local office to pay their tax, which is anti-environmental in the sense that people should not make unnecessary journeys. Every recent Government has tried to promote the idea of drivers not using their vehicles unnecessarily, be it in regard to schools or otherwise, and the same should apply in this situation. When one goes to a local tax office, cars are double and treble parked outside it, which is very negative for the environment.

The policing of motor tax is a crazy system. Members can think of many positive things gardaí could do other than running around trying to police the payment or non-payment of motor tax. That is not the way it should be done. Moreover, if one carries on into the realm of those who do not pay their tax or display their tax discs, many of them end up in court, as can be seen from the national and provincial press. This also involves police and court time, is very expensive and is the wrong way of dealing with this issue. In addition, anyone working in a local tax office will know that in the present environment, where many are unemployed, the level of motor tax evasion goes through the roof. People hold back on payment and a small number do not pay at all. If one takes the point about policing to its conclusion, some who do not pay end up in court and, in some cases, to add to the whole nonsense of the present system, people end up in jail, which adds to the expense for the State. All of these reasons add up to a compelling case to review the current system.

While I accept there is an argument against this, in other jurisdictions motorists pay tax on their fuel, be it petrol or diesel. The fairness in this system is that those who use their vehicles the most, pay the most. It is added on to the driver's fuel cost, so if I am a very regular driver, it will cost me more, whereas if I am a modest driver and use my vehicle only when needed, I will pay less. What could be fairer than that?

Willie Penrose (Longford-Westmeath, Labour)
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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.

Eamonn Maloney (Dublin South West, Labour)
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I acknowledge and to some extent anticipated the arguments that would be presented against my argument.

However, my argument, based on other jurisdictions, is that when one considers the value for money for the State, meaning the taxpayer, and when one adds in all the examples I have illustrated such as policing, police time in court and so on, it is more beneficial. I forgot to include the most important factor, that is, the avoidance of motor tax. I do not wish to use figures from the United Kingdom as comparisons are difficult but I am aware of them and this factor gives rise to a substantial loss to the Exchequer. My point is that were one to accumulate what is lost by the State in respect of motor tax avoidance and what it loses in policing time, court time and so on, the gain for the State and for the taxpayer becomes evident. I do not suggest this proposed system is perfect but in terms of cost efficiency, the Department of the Environment, Community and Local Government should consider the position in other jurisdictions and then raise the argument as to how it continues with that system. I argue that we lose more money for the State by continuing with the present archaic system.

Willie Penrose (Longford-Westmeath, Labour)
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I thank Deputy Maloney, who certainly holds these views strongly. As the Deputy has outlined, a pay-as-you-go system would have some potential benefits. However, the Deputy also will recognise there are many actual and potential down sides. There is a danger of significant economic dislocation and loss of competitiveness and there also would be a clear winners and losers on foot of the switch proposed by the Deputy. As a further example to those which were listed in my initial reply, many rural commuters must travel long distances to work and they would be likely losers compared with urban dwellers with shorter commutes. If the switch was to be made on a revenue-neutral basis, it is far from clear where any financial assistance to compensate those people for their losses could come from in the current budgetary circumstances. Everything must be weighed in the balance.

I note the proposed motor tax Bill will consolidate and modernise motor tax law in general and will reform the administration of the motor tax system to ensure consistency, resource efficiency and best customer practice in service delivery and all Members wish to subscribe to that. For example, it will address the abuse of high levels of off-the-road declarations being made, which results in substantial ongoing losses of revenue. Moreover, significant and necessary improvements to the motor taxation system and its administration are contemplated. However, at this point, for the reasons outlined earlier and notwithstanding the taking into account of the Deputy's submissions, I do not envisage its replacement in the manner suggested by Deputy Maloney.