Dominic Hannigan (Meath East, Labour)
Link to this: Individually | In context | Oireachtas source

I thank the Ceann Comhairle for selecting this topic for discussion and I am very glad the Minister of State, Deputy Brian Hayes, is in the House to reply. I raise the issue of licence plates because we are coming close to January which is the busiest time for our motor trade. There are serious concern in the industry that this will be another year of declining sales and declining trade. We have seen the effects of the recession over the past fives on the motor trade. Driving around Ashbourne or Drogheda five years ago, all the licence plates were 07 and 08 and they still are all 07 and 08 because the trade in new vehicles has declined.

The figures we have seen are very worrying. New car sales are down by more than 50% in the past five years. Commercial vehicle sales are down by 72% and the industry is looking at the new year and wondering what the future has in store for it. There are two key concerns for the industry. The first is the impact of additional taxation in next month's budget and the second is the new year's licence plate.

Each year we issue one licence plate at the beginning of the year in January. We front-load all the vehicle sales to January, February and March and if one looks at the figures for each year, that contention is borne out. For instance, last year, 21,000 cars were sold in January but only 4,000 were sold in July. The UK had a similar problem to this a few years ago but it changed its system, so it now issues new licence plates in January and in July. That has led to an increase in demand but also a flattening out over the year. One of the reasons for that is the dual registration system.

Some 60% of our sales are in January, February and March of each year. That should be changed. If we introduced a system where we issued two licence plates, one in January and one in July, it would give the motor trade much more flexibility in planning things like staff and for the year's trade. Will the Minister look at that? I brought this up last year and I was told he would consider it. The Minister has had consultations on the issue since then and I hope something will be done in next month's budget.

Will the Minister of State let us know the current state of play? Is this something which will be considered because the motor trade wants it? I do not think any of us can see any reason we should not introduce it.

Brian Hayes (Dublin South West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I thank Deputy Hannigan for bringing this matter to the attention of the House and for rightly highlighting the importance of the motor industry to the economic recovery of this country and some of the difficulties it is going through. As the Deputy said, the Minister for Finance, Deputy Noonan, indicated in last year's budget that he would review all of the issues surrounding vehicle registration tax and motor tax revenues for future years this year. That work took place this year and obviously any outcome from it will emerge in the budget in two weeks time.

The real problem here is that some years ago, when the new motor tax system was being introduced, there was an understandable bias towards low emission cars. What is interesting from the figures I have is that 96% of new cars purchased in 2011 were in the first three CO2 emission bands where the VRT rates are lower. People who bought new cars with low emissions paid very little tax indeed and that put out of kilter the total revenue yield from motor taxation.

The consultation process attracted 34 submissions from various sources. The motor industry's representative association, the Society of the Irish Motor Industry, submitted a comprehensive document setting out its proposals in this regard. Aside from its proposals on VRT and motor tax, the industry also put forward proposals in regard to issues surrounding the seasonality of the motor industry and, in this regard, proposed the introduction of a second registration period which it felt would bring a degree of stability to the sector in terms of employment levels.

Some of the proposals contained in its consultation paper were already contained in SIMI's pre-budget submission to the Minister for Finance in respect of the 2012 budget and have again been included in its budget 2013 submission. The industry asked that consideration be given to a number of initiatives that it felt would protect employment and give some stability in the motor industry while at the same time generating some additional revenue for the Exchequer. It pointed out that one of the biggest problems facing the motor retailers is the seasonality of car sales in Ireland, to which the Deputy referred. Each year new car sales become more compacted in the first quarter of the year - 48% in 2010 and 53% in 2011.

The industry is becoming more seasonal each year leading to funding and cash flow issues that add to uncertainty and instability. As a result, it says the following issues arise. As car sales become more seasonal so does employment in the industry as business is over-stretched early in the year and over-resourced later in the year. The costs associated with a seasonal business mean that motor retailers require large funding arrangements with their banks at the start of the year. The costs associated with holding stock both new and used are the largest cost after labour costs. Motor retailers need to have sufficient floor space for the first three months of the year and generally do not require this floor space throughout the rest of the year. As the year the vehicle was first registered is obvious on the Irish number plate, there is a strong emphasis on the age of the car. If a motor retailer is holding used stock over the change in the year, those vehicles will be perceived by the customer to be a year older, leading to depreciation of that vehicle.

Proposals put forward by the Society of the Irish Motor Industry, together with a wide range of proposals submitted to the Minister for Finance from a large number of interested parties in issues across all tax heads, are being considered in the context of the forthcoming budget. I am sure the Deputy will appreciate that I cannot comment on what might or might not be in that budget.

However, I assure him, on behalf of the Minister for Finance, that his proposal is being actively considered in the context of submissions that have been received from the industry to see how the implementation of that proposal would affect the industry. We all appreciate that it is going through a very rough time at present.

Dominic Hannigan (Meath East, Labour)
Link to this: Individually | In context | Oireachtas source

I thank the Minister for his detailed response. I have submitted a number of these Topical Issue matters in the past and I take it from the Minister's response there is a potentially positive outcome here. I do not expect the Minister to comment on that but I look forward with interest to this aspect of the forthcoming budget. I hope we can do something to try to regenerate sales in the motor trade.

Brian Hayes (Dublin South West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Minister for Finance is fully aware of the stress of the motor industry in Ireland. He also recognises, as he said in the Budget Statement last year, that the way motor tax is currently levied gives an enormous bias towards top end, low CO2 cars. That will have to be balanced out. His announcements in the budget concerning the way in which the tax issue will be resolved will not be a surprise to people.

On the Deputy's question about having a second time of the year for the registration of cars, that is something the Minister and the Department are examining following the consultation with the industry. It is under active consideration and I have no doubt the Minister will have due regard to the Deputy's comments last year and this year about bringing forward those proposals. However, I do not wish to second guess what might be in the budget.