Catherine Murphy (Kildare North, Independent)
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I move amendment No. 1:

In page 3, to delete lines 23 to 28, to delete pages 4 to 10, and in page 11, to delete lines 1 to 37.

Tom Hayes (Tipperary South, Fine Gael)
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We are on amendment No. 1.

Catherine Murphy (Kildare North, Independent)
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Yes. The Bill is misnamed. It should be the Motor Vehicle and National Debt (Duties and Licences) Bill 2013 because one of the sections actually deals with the €150 million that is being hijacked and sent to the Department of Finance. It will not be spent on roads at all. When paying for something, people are entitled to ask what they are getting for their money. They see roads and footpaths deteriorating at the same time as they are subject to increases in motor tax. Where is the money going? It is going into the local government fund. One cannot talk about one section of this Bill without talking about other aspects. The money is going into the local government fund so it is not going towards road improvements. The money is to fund local authorities. On Second Stage, the Minister was very up-front about saying that up to €150 million would be taken from the fund and sent to the Minister for Finance. He stated very clearly in his Second Stage speech that it would go towards paying off the national debt. People should be under no illusion about where the money is going. It is not everyone who gets an opportunity to examine legislation and make that connection for himself or herself.

The approach is dishonest. Revenue should fund what it is collected for. This is simply not the case in this instance. If one takes into consideration the €150 million, one will note that the local government fund has been depleted, by €534 million, from a high in 2009 to a low this year. This is above the amount that is expected to accrue from property tax. Despite increases in motor tax to improve the roads, there will not be an improvement in services. It cannot happen because the money is not available.

If motor tax rates were being increased for the purpose of fixing roads and footpaths in my constituency and elsewhere, I would not have tabled an amendment objecting to the legislation. The money is not being used for the stated purpose and the Government should be up-front in stating the true purpose. With the withdrawal of public transport services around the country, very few people have adequate public transport. They do not have a choice but to use a car. The money they pay in tax is not being used for the repair of roads or the provision of public transport, as an alternative to driving; rather, it is being used purely to pay off the national debt. I cannot emphasise this enough and I object as strongly as I can.

I am disappointed that one of my amendments has been ruled out of order. Essentially, it is the one that gets to the core of the problem. It refers to the transfer of money to the Department of Finance. The local government fund uses a needs-and-resources model but the baseline of the assessment of needs is very flawed. It takes no consideration of recent population increases and the associated needs, including in the constituency of the Minister of State, Deputy O'Dowd. Populations do not grow without a growth in associated needs. The baseline is very flawed. If the Government is to have an equalisation fund with a flawed baseline, areas with growing populations, which have new needs, will be disadvantaged. It is a case of there being one circle. There is a dishonest approach and people are receiving extra bills through their doors. I drive a very small car and noted there was an increase in my motor tax in the order of €47. People are talking about this; I am not complaining about the motor tax I have to pay, but it shows there is a sizeable increase that is noticeable. It is costing people more to go to work. The funding is not to make the roads safer or to improve road surfaces, which is what people believe it is for.

Dessie Ellis (Dublin North West, Sinn Fein)
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I do not believe that the Title of this Bill reflects what is occurring. I certainly agree with Deputy Murphy in that regard. That €150 million is being taken from approximately €1 billion in revenue to pay off the national debt is a scam and a shame. In our constituencies, we note the number of potholes and roads requiring maintenance. There are unfinished estates on which money could be spent.

Traditionally, the money went to the local authorities and was divided between them. People do not realise that so much is being taken from this revenue. They actually believe they are paying for road maintenance.

I object to the fact that an amendment was ruled out of order on the basis of there being a cost to the State. This is connected to what happened in 2008 under the previous Government. There was much hype about people buying new cars. All sorts of incentives were given to people to buy new emission-free cars attracting a low rate of taxation. There is a fundamental problem in that we are either moving towards an environmentally friendly society and looking towards emissions reduction or we are not. Our very motor tax system is wrong and we should be examining emissions. There needs to be an overhaul of our approach. There is no use in saying that what was proposed in 2008 was not viable because it would cost the State at a later date.

We need to look at basing motor tax on car emissions rather than on their size. The current process is flawed. I am opposed to this Bill on that basis and on the basis of Sinn Féin's amendments having been ruled out of order.

Thomas Pringle (Donegal South West, Independent)
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I agree that this Bill has been wrongly named. It should be entitled the appropriation Bill, to appropriate money to write down debt. The linking of motor taxation to car emissions was a positive development. It encouraged people to buy cars of greater value to the environment and society and eased the burden on them in terms of taxation of such vehicles.

The Government amendment introduced on Committee Stage shows the real purpose of this legislation and the Government's proposed use of moneys from motor taxation into the future. It is proposed that €150 million will be taken from motor taxation receipts this year and put towards writing down our national debt. Last year, €46.5 million was taken from motor tax receipts and used for this purpose. This illustrates the mockery of the entire Government process. It is now proposed that money previously collected through motor tax and ring-fenced for local government will be stripped from the Local Government Fund and replaced with funding from the property tax, which will bring no additional benefits to local authorities. The €150 million to be taken this year is only the thin edge of the wedge. We will see in future years more funding being taken from motor taxation receipts and local authority funding being bridged by receipts from the local property tax, with no additional benefit to local authorities or services, which will continue to be put under threat. This will also lead to further deterioration of our roads. This Bill should be opposed on the basis that funding is being taken from motor taxation receipts and used to write down national debt, which is disgraceful.

Fergus O'Dowd (Louth, Fine Gael)
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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-----

Joe O'Reilly (Cavan-Monaghan, Fine Gael)
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The Minister of State should confine his response at this stage to the amendment.

Fergus O'Dowd (Louth, Fine Gael)
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I am trying to deal comprehensively with the points raised. Is that okay?

Joe O'Reilly (Cavan-Monaghan, Fine Gael)
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I ask the Minister of State to stick to the subject matter of the amendment.

Fergus O'Dowd (Louth, Fine Gael)
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I am speaking specifically on the amendment and the points made by Deputies Catherine Murphy, Dessie Ellis and Thomas Pringle. I believe this is a balanced approach. The Government is committed to supporting the Local Government Fund, which will retain the bulk of income from motor tax to be used to fund local services. The balance of the fund, for distribution to local authorities and to provide for road and public transport infrastructure, will be of the order of €960 million. In other words, almost €1 billion in motor tax receipts will be definitively used to maintain the road network, notwithstanding that up to €150 million of all the money collected may not be spent in that way.

Dessie Ellis (Dublin North West, Sinn Fein)
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The Minister of State mentioned the Finance Bill. We know this measure is contained in that Bill. Nobody is saying this proposal is being introduced without having been previously flagged. The point we are making is that motor tax receipts should go to local authorities for the purposes outlined. I find it difficult to understand the reason Fianna Fáil, which introduced the emissions rule in 2008, did not table amendments to this Bill.

It seems ironic that its members have remained silent throughout the debate. The party introduced this measure which imposed huge costs. It made a false promise and not one word has been said by its members during the debate.

Thomas Pringle (Donegal South West, Independent)
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I point out to the Minister of State that the Minister for Finance did not say that in his Budget Statement. I specifically checked for it in the budget because it happened last year. While the Minister mentioned the increase in motor taxation in his Budget Statement, he did not mention that the revenue accruing from it would go specifically towards writing down our debt.

Catherine Murphy (Kildare North, Independent)
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I do not believe the Minister of State believes this. He has said the Government needs to raise this tax to place local government on a sustainable footing and that the money raised will be sent to the Department of Finance to pay down the national debt. That is what will be done with the money raised. It will not be put into the motor tax or local government fund; rather it will go towards paying down the national debt, as the Minister for the Environment, Community and Local Government made very clear during his Second Stage speech. It was stated that this was where the money would go.

Fergus O'Dowd (Louth, Fine Gael)
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I am not denying that.

Catherine Murphy (Kildare North, Independent)
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There is no doubt about where it will go. It will not be used to provide a sustainable source of funding for local government; it will go nowhere next, nigh or near local government.

The idea behind introducing carbon emission targets and the approach to reducing such emissions were in recognition of the fact that we had carbon change obligations. Transportation is one of the areas in which we face a serious challenge. We are losing routes from the public transport system, which makes people much more car-dependent. We will struggle to meet the carbon emission targets by 2020 and there is every chance that the targets will be increased in the review to take place in 2015. We need to reward people for good behaviour in reducing carbon emissions and will have to pay fines if we do not reach the targets. It is counterproductive not to at least consider this issue from a medium-term perspective.

Let us be absolutely clear; this is not about the motor tax or local government fund. The proposed increases - this is the reason I tabled the amendment - are to achieve one thing and one thing only, namely, to pay down the national debt.

Joe O'Reilly (Cavan-Monaghan, Fine Gael)
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Is the amendment being pressed?

Catherine Murphy (Kildare North, Independent)
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Yes, I am pressing it.

Joe O'Reilly (Cavan-Monaghan, Fine Gael)
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I will, therefore, put the question.

Fergus O'Dowd (Louth, Fine Gael)
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May I respond?

Joe O'Reilly (Cavan-Monaghan, Fine Gael)
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The Minister of State will have an opportunity to do so when we reach the next Stage.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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Amendment No. 2 has been ruled out of order because it would incur a potential charge on Revenue.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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The Minister of State wishes to move a verbal amendment, of which he has given notice.

Fergus O'Dowd (Louth, Fine Gael)
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I move the following amendment:

That the word "vehicles" be changed to "vehicle".