Pat Gallagher (Donegal South West, Fianna Fail)

As the House is aware, the purpose of the increases in motor tax is to fund local authorities' general purpose and road funds in 2003. The level of increase in motor tax rates provided for in the Financial Resolution passed by the Dáil on 12 December last, and provided for in this Bill, is set at 12%. The Senator's amendment would see the increases reduced to 5%.

A decision to increase taxes is not taken lightly. If a smaller percentage increase was feasible, it would have been proposed but it must be remembered that the decision to increase motor tax rates was taken against the background of the past ten years, from 1992. If we were to increase motor tax on a yearly basis in line with inflation, up to last year that increase would have amounted to a cumulative figure of 33%. However, the increase was 3% in 1998, 3% at the beginning of 1999 and between 4% and 6% in 2001, giving a total increase of 12%. It has been suggested by Senator Bannon that we should increase taxes in line with inflation but we have done the opposite. There has been a 12% increase in the past ten years up to last year.

I repeat what I said on Second Stage. For the majority of motorists the increase will be between 29 cent and 58 cent per week. The increases set out in the Bill have been introduced with good reason. The revenue generated by motor tax increases goes to the local government fund which, in turn, is used to finance the general purpose fund and non-national roads. If the Senator's amendment was to be accepted, it would significantly reduce the level of funding available to local authorities by €42 million. Nobody could condone this.

In the light of current demands on local authority funding and the desire of the Government and local authorities to maintain non-national road spending at the 2002 record levels, it would not be sensible or wise to accept the Senator's amendment. I refer Senators to a debate in this House before Christmas when a case was made for more funding for local government. They cannot have it both ways.