John Gormley (Dublin South East, Green Party)

I thank all the Senators who contributed to this debate. As in the other House, the contributions were wide-ranging and this is appropriate having regard to the far-reaching functions of all local authorities and the fact the Bill introduces fundamental change to the basis on which motor tax will be charged in the future.

Increasing any tax is not a popular thing to do and the decision to increase motor tax rates for the existing fleet is not one that was taken lightly. The sole reason for increasing rates was to fund local government. The 9.5% increase for the majority of the fleet is well below the rate of inflation since the last increase in rates in 2004. The increases for 95% of the fleet range between 27 cent and 98 cent per week. Senators are aware of the significant role which the local government fund plays in financing local government and of the need to maintain this funding. Motor tax receipts represent some 60% of the local government fund, which is ring-fenced exclusively for local government.

The increase in motor tax rates is about local government. It is about providing sufficient resources to local authorities to enable them to provide quality public services to all of their customers. Failure to raise funding through increased motor tax rates would have resulted in significantly reduced allocations to local authorities in 2008 for both general purpose funding and for regional and local roads. Total funding for the local government fund for 2008 is estimated at €1.6 billion, which represents approximately 30% of local authority current funding requirements.

The motor tax increases have enabled me to provide for substantial increases in general purpose funding and in regional and local road grants to local authorities for 2008. This year I have allocated some €999 million in general purpose grants while €565 million is being provided from the fund towards the development and maintenance of the regional and local road network.

Senators have referred to the importance of addressing climate change, which is profound in its implications. I have elaborated on this in some detail. To be fair to the Senators, I should address some of the other issues they raised. I want to clarify the position with regard to the scope of the new CO2 system, which was raised by Senator Brady. The new CO2-based motor tax system will take effect from 1 July 2008. In the first instance, it will apply to new cars registered on or after that date. It will not apply to second-hand imports which were registered abroad prior to 2008, contrary to what has been said in the House today. In addition, anyone who registered a low CO2-emitting car in the first six months of 2008 will be switched onto the lower CO2-based motor tax rate on first renewal of motor tax after 1 July 2008.

Cars which are first registered abroad from 2008 and subsequently imported here will come within the CO2-based motor tax system. This will ensure equity as between cars which are registered here as new from 2008 and future imports of equivalent second-hand cars. I should make it clear that cars registered before 2008 will continue to be taxed in future years under the existing motor tax system related to engine size. This will ensure equity as between cars in the existing fleet and equivalent imports. Some erroneous statements were made and the position needed to be clarified.

There have been some criticisms of the new CO2-based system. A number of Senators said they would like to see it applied retrospectively to the existing car fleet. Having examined the issue, I have concluded that it would not be appropriate to do so. I made the position clear in the other House and perhaps should repeat the reasons here.

From the outset, the public consultation process on motor tax made it clear that the new CO2-based system would apply from a specified date and that cars registered before that date would continue to be taxed in future years under the existing motor tax system related to engine size. Retrospection would not be practicable as there is no authenticated CO2 data for the majority of the existing fleet. The CO2 values on the Revenue and NVDF systems, in respect of new cars only, have not heretofore been used for any business purpose, have not been collected as the basis for a fiscal charge and, accordingly, have not been authenticated to any degree. It would be unsound to apply charges on the basis of such data.

If the new system were to be applied retrospectively, it would be unfair to penalise people for a purchasing decision made in the past. If there was an optional "opt in" to the new system, it would undermine the revenue base of local government, resulting in serious financial problems for local authorities throughout the country. As I said earlier, I want to ensure that local government continues to deliver for communities and business throughout the country. To this end, the local government fund must have the resources necessary to meet those demands.

The clear objective of this new motor tax system is to influence the purchasing decisions of consumers. Purchasers of cars with low CO2 emissions will be rewarded while a premium will be charged on vehicles with high CO2 emissions.

Senator Coffey referred to the national climate change strategy and the quantified effects of a range of measures in various sectors. A combined annual saving of 50,000 tonnes is attributed to the re-balancing of motor tax and vehicle registration tax and the introduction of an enhanced vehicle label. This saving is based on indicative calculations contained in a study prepared by Sustainable Energy Ireland and referenced in a report on greenhouse emission projections prepared for my Department in 2006. As it would not have been possible for the study to assess the impacts of the actual motor tax and VRT changes announced in budget 2008, it is necessary to update the estimate of the saving from these changes.

Factors which will be taken into account include the significant increase in car ownership in recent years, the average mileage of vehicles in Ireland, the rate of fleet renewal and the projected impact of the tax changes on purchasing patterns. I have already indicated that I will present updated figures where appropriate for relevant measures in the context of my annual report to the Oireachtas on the implementation of the national climate change strategy. I envisage that this report will be ready by the end of April.

I would also like to address some of the points made by Senator Bradford. I will have to come back to him on the question of LPG. On the question of Ireland's contribution, while its contribution of approximately 70,000 tonnes annually would seem to be small in the context of overall emissions globally, this argument is used by all countries. I attended a climate change conference in London last Friday. At 44 million tonnes, London's emissions are relatively small for a city of 12 million people but the United Kingdom's emissions are greater again. Nonetheless, the UK argues that its emissions amount to just 2% of global emissions. Every country can argue this point.

I recall the point made by Ghandi when asked by a mother what she could do about a child who kept eating sweets. He replied that the first thing he had to do was to give up sweets himself. Then he could talk to the child. That is an appropriate lesson in regard to climate change. We must all play our part — each state and each individual. This is why I am introducing the new awareness campaign. I have seen the advertisements and am very impressed with them. They will induce a sense of responsibility and make people understand that they can do something. It is so easy to go from denial to despair in one small leap. There is that area in between, where we can make people understand that they can do something.

Senator Bradford made a valid point. I have no doubt that even as we increase the environmental friendliness and energy efficiency of products consumption will go in only one direction. We have seen this with regard to the transport figures. We can now produce a so-called environmentally friendly car with lower emissions but households may have three of them instead of one. When we construct houses we have things in them that were unheard of previously. This point was made on Friday. Heated towel racks have become almost standard in homes. This is a product of affluence. We have all of these things which are add-ons and may enhance our quality of life to some degree but one can ask whether they are really necessary. We must examine how we can combat climate change and reduce emissions if we continue to purchase all these products.

After transport the big increase in terms of global emissions comes from the IT sector, namely computers and gadgets in our houses. These are issues we now have to confront and examine how we will deal with them. I have two gadgets in my pocket. I am a gadget person, as are we all. We consume huge amounts of energy. We usually think of the IT sector as being energy efficient and environmentally friendly but we need to look more closely at it. I could go through it in detail. There is no easy solution. Every time we come up with a so-called solution we are knocked back a little. That is why climate change is the biggest challenge facing us because it seems there is not a quick fix. We are all looking for that silver bullet but at the end of the day it will require a lot of thinking. We need to question our consumerist values. That is difficult when we, and especially our children, have been hard wired to be consumers from an early age.

I thank all Senators for their contributions and I look forward to Committee Stage.