Paschal Mooney (Fianna Fail) | Oireachtas source

Cuirim fáilte roimh an Aire Stait go dtí an Teach. I welcome the Minister of State to the House.

The Fianna Fáil Party is opposed to the Bill on the basis that in our view it is a continued Government attack on motorists struggling to make ends meet. Financial incentives were put in place in 2008 and this encouraged drivers to switch to fuel efficient cars with low CO2 emissions. It was a core feature of efforts to tackle climate change. We suggest this Bill exacerbates last year's increases and further erodes the progress made in placing environmental concerns at the heart of public policy. It penalises those motorists who took the decision to use environmentally-friendly cars by shifting the goalposts in the middle of the game. It is interesting that in defence of this proposal, the Minister of State, Deputy O'Dowd, points out that the amount of tax that has been generated since 2008 has reduced and the number of vehicle taxed on the basis of CO2 has increased by about 5% year-on-year and that a quarter of all cars on the roads are CO2 cars of which 90% of these are taxed at the three lowest bands. This is the reason receipts from motor tax has shown a decline from ¤1.06 billion in 2008 to ¤950 million in 2012.

I suggest it has more to do with the downturn in the economy rather than anything else. The Society of the Irish Motor Industry has said that new car sales are down 10,000 on last year and it has always said that more tax will be generated from increasing the sale of cars rather than increasing taxation. I am sure the Minister will see some merit in that argument because when the scrappage scheme was introduced and then extended there was no question that not only did it maintain jobs in the motor industry but there was an increase of employment in the motor industry because there was a subsequent increase in car registrations. I know that every Government sees the motor industry as offering an opportunity to generate income from the low hanging fruit. The proposals contained in the Bill mean that not all the money will be ringfenced but that some of the money raised from the increase in taxation will transfer to the central Exchequer. We, on this side of the House, have always said we support any measures that will try to stimulate and improve the economy and we support any measures that will try to get us back to eliminate our budget deficit and get us back on an even keel. However, some elements of the fiscal policy and taxation that the Government pursues are open to question, in particular taxation in the motor industry.

The motor industry is very sensitive and is critical to the economy. I know there is an argument that Government should not necessarily support the increased sale of cars as we no longer manufacture cars. We must import all of the cars sold here and we should not necessarily be stimulating car sales. However, car sales provide valuable employment not only in the area of direct sales but also trickling down into the care and maintenance of cars. I am not going into all the detail of this short Bill, but we believe that the continuing targeting of environmental-friendly cars on top of last year's changes is a regressive move. In our pre-budget submission, we earmarked an overhaul of the motor taxation system that would yield the ¤100 million increase the Government is seeking in this legislation but would not rescind the environmental platform that Fianna Fáil built up while in government.

Our vision for the motor taxation regime is one that recognises the fact that motorists contribute approximately ¤4 billion to the Exchequer through taxation, VAT and excise duty. They need a fair transparent system that allows them to make long-term decisions on car purchases without the fear the Government will hike up their taxes in the near future. It is very sad that the people who are being attacked now are those who purchased cars from 2008 onwards. From a cursory look at the cars in the carpark in Leinster House, one will note that the vast majority of cars were registered in 2007 to 2012. We suggest the decision to incentivise low CO2 emission vehicles is having a real impact on Ireland's efforts to contribute to tackling climate change. Some 88% of new vehicles since 2008 have been purchased in the A to C bands. The switch was taken on the basis of the financial incentives provided. The Government is now jeopardising that progress. The connection between the rate of tax and the CO2 emissions was at the heart of the introduction of CO2 based bands in 2008. It ensured a link existed in the motorist's mind and more importantly in his or her wallet between driving an environmentally-friendly car and paying a low motor tax rate. The Bill further erodes that connection. It downgrades the importance of environmentally sound practices at the heart of broader public policy. The Government Members will agree there is a need to continue to tackle climate change. I will be interested to hear the Minister of State's response in this area, considering that we think this will increase environmental damage.

One of the groups lobbying against this measure has suggested that, on the basis that people had bought in good faith, the tax could be applied to new cars rather than current ones. AA Ireland claims that there is no way to dress up the situation and that the increased tax will push up the cost of living for car owners, affecting almost every household in the country. There would be some justification for an increase from next year onwards. Mr. Conor Faughnan went on to assert that drivers of older vehicles would feel harshly treated, as pre-2008 cars are already highly taxed and are not luxuries. In many cases, ordinary motorists can barely afford to keep them on the road.

This is a disappointing development. The Government has not managed to justify the increases as a means of advancing environmental friendliness. It is a smash and grab, another opportunity to raise some money. I appreciate that the Government needs every penny it can get, but it could have looked for it from someone other than motorists. Fianna Fáil tabled alternative proposals in its pre-budget submission.