Paudie Coffey (Fine Gael)

I welcome the Minister and have previously said that his attendance in the House is appreciated. There are two core elements to this Bill and the Minister outlined them in his contribution. There is an element of motor tax that relates to the raising of revenue and the ring-fencing of local government funds. This is part of a wider debate on the funding of local government and general local government reform that could be held another time. The other core element of the Bill relates to the CO2 emissions-based motor tax system that is to be introduced.

I believe that talking about these two elements of the Bill brings about a conflict in thinking. In one respect we are trying to promote lower CO2 emissions but in another respect this is an important revenue raising exercise for local government. That conflict will need to be resolved. I accept that is the system we operate and that local government funding in general will have to be reviewed in the future.

With regard to the Minister's proposals, on which he has been questioned in the Lower House, do they go far enough to reward those who are thinking green and taking action to lessen their car usage and CO2 emissions? People are genuinely making an effort to reduce carbon emissions. As the Minister has outlined there is a huge dependency on the car. While the general thrust of the Bill will, I hope, raise awareness of the amount of CO2 emissions being produced here I hope it will reduce it. The Minister outlined the challenges.

I wish to point to some figures produced by the motoring industry. The motorist in Ireland today is probably one of the most taxed. There is a dependency on the car not by choice but as a result of Government policy or, perhaps, Government inaction over a number of decades. I live in County Waterford. Waterford city is the capital of the south east region. The public transport networks that link the regions with Dublin are still poor. I am sure the Minister will agree with that because he is making proposals within Cabinet. In the rural hinterland, in the villages and towns, there is limited connectivity with regard to public transport. To get to work or college, people are dependent on the car. This has huge implications.

The Government's take from the motorist for 2006 — I am sure it has increased since then — for motor related taxes was in excess of €5.5 billion, an 8.6% increase over 2005. The VRT on cars in 2006 was €1.25 billion, an increase of 12% on 2005. The total Government revenue from fuels in 2006 was in excess of €2.5 billion, which has increased substantially in recent years. The VAT take on fuels increased in 2006 to €496 million, a 12.2% increase on the 2005 take. Motor tax in 2006 was more than €879 million, a 9.6% increase on 2005. The Minister will get the record for breaking the €1.8 billion ceiling in his proposals for 2008. He has gone through the roof of €1 billion in collecting motor tax on the backs of Irish motorists, that is, from people who need a car. It is not that they are going there for the fun of it or to joy-ride. They need their cars on a daily basis to go to work, school or college. I am not sure if the Minister is proud of that record. Local government needs the funding but there are other ways of collecting the revenue. The sum of €1.08 billion in 2008 appears excessive.

The Minister is introducing two systems of car tax. Under the existing system cars will continue to be taxed on the basis of engine size while under the new system there are seven CO2 bands as in the proposed VRT system. Following a close examination, Fine Gael sees some problems with it. Amendments were tabled in the Dáil but were ruled out of order. The Labour Party also tabled some amendments. I appreciate that the Minister compromised a little with regard to them and took on board some of what we said.

There are problems with the new system. The increase of 9.5% in the current motor tax system for smaller engines is unjustified. These are small engine cars that are not contributing enormously to the CO2 emission problems and the increase bears little relationship to the environment. It is a tax increase on the backs of people who are already behaving in an environmentally friendly fashion. It is estimated this tax increase will raise an additional €83 million, hitting every household and every family in the country, due to the dependency levels.

If the Minister was sincere about encouraging greener cars he would freeze the tax rate on smaller cars. That proposal was made to him and it would not cost the Exchequer a huge amount. It would reward people for having smaller engines and thinking greener. It reminds me of the very welcome greener homes scheme, introduced for heating homes, where the pioneers of renewable energy in their homes were penalised for introducing renewable technology into their homes before the greener homes scheme was introduced. No retrospective grants were made available. These were the people who invested in renewable technology, who were thinking greener and were penalised. Those who then availed of the scheme received grant aid for their homes. This is a similar situation where those who have been thinking green should be rewarded.

The new CO2 based motor tax regime does little to address Ireland's greenhouse gas emissions. The Government's national climate change strategy 2007-2012 predicts that the rebalancing of motor taxes and fuel economy labelling will only save 50,000 tonnes of CO2 emissions per year. The increase in emissions in the transport sector from 2005 to 2006 was 682,000 tonnes. This increase in one year is almost 14 times greater than what will be saved over the years from the new CO2 motor tax system. It is clear there are wider problems in tackling the CO2 emissions. The CO2 based system will only apply to new cars after 1 January 2008. In respect of any imported car, after that date, people who have already taken the initiative and bought low emission cars will never see a reward for their good environmental behaviour.

In 2006 and 2007, people were thinking greener and they will not be rewarded. They paid higher VRT when purchasing their cars, compared to a similar type car bought in 2008. They will have a higher ongoing car tax liability because they were registered pre-2008. They will also have an ongoing liability in regard to their resale values. Those who have a 2007 car, which I would consider relatively new, with the same CO2 emissions as a car bought in 2008 will be penalised again. The Minister admitted in the Lower House that he has a database going back to 2004 on which he could rely. I ask him to reconsider that issue and provide for retrospective car tax for those people who bought with good intentions because they have been penalised unfairly.

There are financial implications in regard to motor tax. It is proposed to raise a further €83 million for local government funds. There is a wider debate here to be visited again. There is a conflict in that we are either trying to raise revenue or trying to cut CO2 emissions. If the Government gets its act together by providing a good public transport system and car usage rates go down, where does that leave Government funds? Have we thought this issue through? If dependency levels are reduced, the amount of revenue raised will be reduced in real terms for local authorities. Therefore, there is a downside.

The Minister mentioned broad figures for emissions, a 180% increase, in the transport sector since 1990. Some 20% of our total emissions are produced by the transport sector. I call on the Minister to ensure connectivity for school transport and connectivity between villages and towns into the larger cities for public transport. The roll out of Transport 21 needs to be completed.

A large rural based population is dependent on the car. Essentially their day to day living is dependent on it, whether it be the school run or getting to and from work or the shops. The car is essential in rural areas. This will hit rural families to a greater extent where there is no public transport system than those in the city.

The CO2 emissions element of the Bill will raise people's awareness and make them think when they purchase new cars. People should now look at their lifestyle and buy a car to suit their lifestyle rather than the lifestyle of someone else, as we see with the SUVs on the school run. This must be tackled and I applaud the Minister's effort.

Is it possible to impose the new tax system retrospectively to 2004? The people who bought between 2005 and 2007 will suffer.