Brendan Griffin (Kerry, Fine Gael)
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The cost of living in Ireland is a massive hardship for so many families and the cost of motoring is proving particularly difficult. The Minister of State will be aware that as she drives around the country that the price of fuel in the forecourts has rocketed in recent months. It could be between €2.10 or €2.20 for a litre of diesel or petrol in most places. This is hitting people hard in the pocket. I very much welcome the intervention to date on the cost of fuel. Without that excise reduction delivered some months ago, we would probably be looking at prices hovering around €2.40 per litre for diesel and petrol. That has helped however most people filling a tank of diesel or petrol weekly will notice a significant increase in the cost of getting from A to B. In most cases people are travelling to and from work, dropping children to or from childcare and doing the necessary journeys that people have to make every day in the course of their lives. There is very little recreational driving going on at the moment because people simply cannot afford to do that. I am asking that the Government to intervene further as soon as possible. I understand this could be done through statutory instrument. The Government could give a waiver for a year on renewing their motor tax. This was something that we were able to do very easily during the Covid emergency when motor tax and NCTs were about to expire. It was possible to extend the term over coverage with the stroke of a pen. Rather than asking people to pay yet another bill to cover their cars with motor tax for 12 months that they be given further time free of charge to give them a break.

The Government is getting the tax back through increased VAT on fuel and everything else in the economy. It is only fair that we give a break here. I have been told we can do no more on excise on fuel. I welcome the measures that have been put in place to date but this is something that could very easily be done to target the motorist in a very positive way and give them a bit of a break in recognition of the extraordinarily high prices that are being charged for fuel at the moment. It is something that would constitute an emergency measure but this is an emergency. People are really suffering. They cannot afford to pay their bills. I welcome reports this morning that the budget is due to be brought forward to September. This is something I raised at our parliamentary party budget meeting on Tuesday. It gives adequate time to prepare a comprehensive package of measures to address the cost-of-living crisis and all the other challenges we have in the country but the budget will be earlier than normal. The sooner these interventions can be made the better. I am asking that before that, consideration would be given on motor tax that would give motorists a break and one less bill to pay for 12 months at least. It is the least we could do in the circumstances. It would make sense and the benefits would be felt throughout the economy because the cost of delivery and transportation impacts on all the products and services we use. It would also be felt by the wider community and immediately by the motorists themselves.

Hildegarde Naughton (Galway West, Fine Gael)
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Motor tax receipts in 2021 were €908 million. Motor tax receipts accrue to the Exchequer. Changes to motor tax rates, including the potential abolition of motor tax, require primary legislation. These changes are made at budget time and are given permanent effect as part of the finance Bill.

A number of issues need to be considered in any proposal to abolish motor tax. The driver and computer services division of my Department is responsible for the maintenance of the national vehicle and driver file, NVDF, the central vehicle database, as well as supporting systems in local motor tax offices. The annual cost of running the NVDF is currently €22.9 million. However, the NVDF also supports road traffic enforcement, vehicle testing and the road transport operator licensing system and there would be a continuing requirement for it to remain in operation. Abolishing motor tax would require a legal framework to be put in place to ensure regular notification of vehicle and driver details to the NVDF, and compliance with that framework, to maintain an up-to-date vehicle database. Abolition of motor tax would result in savings on the paper cost of discs, and on printing and postage, as well as some savings on staff costs. However, it is estimated that would amount to total savings of just under €4 million in the Department.

The Department of Housing, Heritage and Local Government publishes the amalgamated audited annual financial statement for all the local authorities on an annual basis. The most recently published statement is for 2019 and gives the total cost of running the local authority motor tax service at €29.41 million for the year. Total savings, therefore, would be in the order of €33.5 million for the Department and local motor offices combined.

Motor tax rates are not a contributor to the recent increases in the cost of living. The last general increases in motor tax, affecting all vehicle categories, took effect from 1 January 2013. There were significant reductions in motor tax for goods vehicles in budget 2016, which took effect from 1 January 2016, with the top rate of tax being reduced from €5,195 to €900 annually. There were also some increases to rates from 1 January 2021 for some private vehicles based on carbon dioxide emissions and registered between 2008 and 2020. The rates applied only to the higher emitting bands C to G with rates increasing by between €10 and €50 annually. These changes applied to some 187,000 cars or approximately 8.5% of the total car fleet.

Of those affected, 120,000 owners saw their annual tax increase by €10 with the upper increase of €50 applying to 7,000 vehicles. Motor tax is payable for three, six or 12 months. Any proposal to abolish motor tax would also need to consider the position of vehicles under current taxation at the time of abolition. It is likely that the owners of such vehicles would look for refunds of the proportion of motor tax paid for the time remaining on the disc. This would add significantly to the first-year cost of abolition as 2.9 million vehicles are under current taxation at any given time.

Another aspect to be factored in are the provisions of the Eurovignette directive, which provides a legal framework for charging heavy goods vehicles for the use of certain roads. While the directive largely concentrates on the provision of mechanisms for infrastructure charging, it also sets minimum rates for vehicle taxes applied by member states to heavy goods vehicles. The minimum rate for the heaviest band is €929. Since the reduction in motor tax from January 2016 to a top rate of €900, Ireland has been in technical breach of the directive.

Last but not least, motor tax is an important environmental policy lever. Motor tax based on CO2 emissions is on a graduated banding structure differentiating in favour of the most environmentally-friendly vehicles. Abolishing motor tax would reduce the incentive for owners to move to less polluting vehicles, potentially impacting the transport emissions target for 2030 set out in the Climate Action Plan 2021. In addition, the Commission on Taxation and Welfare may have considered this area as part of its deliberations on how the taxation system can be used to help Ireland move to a low-carbon economy. Any proposals to review or change motor tax should also be mindful of the commission's recommendations once published.

Brendan Griffin (Kerry, Fine Gael)
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I thank the Minister of State for her reply. I emphasise that I am clearly not talking about motor tax abolition; I am talking about giving a break to motorists at the moment in respect of a Government charge on an activity that is already heavily taxed and is already extremely expensive because of a number of factors, many of which are outside the control of the Government. While I am not talking about abolition, I am talking about giving people a bit of breathing space for a limited period because motorists are already paying more than anyone ever anticipated to get from A to B.

Because of the structuring of our motor taxation system, doing that would give owners of older vehicles, people who are typically less well off, more of a break than owners of newer vehicles because the ridiculous system we have taxes older cars much more. Someone can drive a newer car with a value of multiples of that of an older car and pay a fraction of what the owner of the older car pays. This would be a very fair measure.

I very much welcome some of the positive interventions, including reducing the prices of public transport. However, those interventions do not affect rural dwellers for whom public transport is not an option. It is either non-existent or not responsive to their needs in getting from A to B, getting to work, or dropping children to school, childcare or elsewhere. This would be a targeted measure to give those people a bit of help with their transport costs because they cannot avail of the Government interventions in reducing public transport prices.

In conjunction with the Department of Finance, the Department of Transport needs to give this further consideration. This measure could be introduced pre-budget through a statutory instrument. I ask the Minister of State to reconsider the matter to give the hard-pressed motorists of the country a bit of a break because we know things will not get easier any time soon. The Government needs to reduce any charges it is putting on motorists as much as we can. We can control some things and we need to intervene where we can do so.

Hildegarde Naughton (Galway West, Fine Gael)
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The Government is acutely aware of the cost-of-living pressures people are experiencing. Addressing the cost of living is a matter for consideration as part of the budgetary preparations. I thank the Deputy for his contributions and I will take the issue back to my Government colleagues.