Caít Keane (Fine Gael)

I welcome the Minister. This is old news given that it was announced last December in the Financial Resolutions passed by the Dáil on budget day. What we are doing today is giving legislative effect to what was announced on budget day. In 2007 it was announced in the Budget Statement that to support the environmentally-friendly policy of reducing carbon emissions, the system of vehicle registration tax was to be changed to encourage the purchase of lower emission vehicles. I give credit where it is due. The then Minister, Mr. John Gormley, had the best of intentions in seeking to be environmentally friendly, but these measures were described at the time as being broadly revenue neutral. They are not achieving the second aim. The economic climate has changed drastically owing to the recession and the predicament in which we find ourselves and as a result the Government has to find money somewhere. It could have been found elsewhere had different decisions been made. The purchase of vehicles with lower carbon emissions that do less damage to the environment is to be commended and encouraged and there is still ample opportunity to avail of the lower rates for such vehicles provided for in the Bill. Those who buy vehicles that fall into the lowest band categories in terms of CO2 emissions will pay the lowest tax rate, rightly so.

The Bill increases motor tax rates. As the Minister has given them, I will not rehash what he said. There will be an increase in the tax payable by the owners of cars with lower emissions and neither the Government nor I contest this fact. However, it also cannot be contested that the owners of cars with lower CO2 emissions are paying considerably lower amounts in motor tax than the owners of vehicles with higher rates of carbon emissions. The incentive to buy more eco-friendly cars is not being removed in the introduction of this legislation. Those car owners whose vehicles pollute the most will pay most and that will still be the case under the Bill. The rates have changed, as we must recognise, but we must also be realistic when tabling legislation to ensure it will not have a knock-on effect. There is a massive gap between the rates payable on eco-friendly and the more polluting vehicles. The principle that the polluter pays more remains static. Moreover, this is the first increase in motor tax since 2008. It is not, therefore, the case that vehicle owners have been subject to consecutive yearly tax hikes and I do not presume they will be.

Undoubtedly, there is opposition to the tax increases, some of which we have heard. However, all of the facts must be considered. One must either raise taxes on cars or the lower paid. If one wishes to raises taxes on wages and work, that is another argument. We cannot have our cake and eat it, as we must find the money somewhere. Therefore, difficult decisions have to be made and this is a one that must be made at this time, as the reality is that tax revenue is plummeting, which is a worrying development. As we are all aware, our economic position is unstable and we simply cannot afford to see this decline in tax revenue continue.

While the CO2 bands were designed to promote a switch to lower emission vehicles, as I stated, the changes were also based on a second principle, that of being revenue neutral. This aspect must also be considered. The motor taxation system must be reviewed to ensure it meets the twin objectives outlined during the years. As the second is not being met, the Bill is being introduced to try to reach it.

In the initial part of the Bill the definition of CO2 emissions is as contained in section 130 of the Finance Act 1992. I ask the Minister that in another section we look at the definition of CO2 polluting cars. A number of months ago I watched the programme "Top Gear" on which it was reported that battery cars charged at the low rate were more polluting if one calculated the figure from the early stages of manufacture, taking account of the pollution caused in the making and recycling of the battery, the weight of the battery and the level of consumption of petrol used in driving. This shows that cars deemed to be CO2 friendly are not so. Therefore, the definition of CO2 emissions, particularly as it applies in the case of motor vehicles, must be evaluated on a scientific basis. I ask the Minister, perhaps in another Bill, to look at this issue because we must ensure we are doing what is right for all drivers here. The Minister said he was reviewing the structure of vehicle motor tax as a whole, so he might provide some information in that regard. Section 6 gives permission on a once-off basis to transfer the revenue raised from the local government fund into the Department of Finance. Given the State coffers are in a dire position, and while I agree with this measure, I ask the Minister to confirm this is a once-off measure, which is how I read the Bill. Moreover, I hope taxes raised locally for local government will stay in the local area.