Pat O'Neill (Fine Gael) | Oireachtas source

I welcome the Minister of State to the House. The Bill provides for increases in duties and motor taxation. We again are listening to populist politics from the Opposition. They would not introduce a motor or property tax but if that were so, they would have to increase income tax. This would mean we would have to take the money out of people's income tax and every service would be free. Almost 90% of the Local Government Fund is generated from motor tax and it is equalised when distributed to the various local authorities. For example, the local authorities in Dublin and Cork have a large rates base and a significant proportion of the motor tax they collect is allocated to smaller local authorities to make sure they have the funding to deliver the services they have to deliver such as water and waste services and maintenance of roads and parks. That is what the Local Government Fund and motor tax are about. In other words, we do not want to go back to 1977 when a Government entered office and abolished motor tax and rates. Now we have had to reintroduce property tax and increase motor tax rates to fund the country because it was bankrupted five years ago due to a lack of efficiency in spending.

The legislation will deliver more money for local authorities because they will have access to a wider tax base through property tax, water charges and increased motor taxation. Local moneys will stay in local areas to fund local services. The Minister of State referred to the reduction in motor taxation receipts following the changeover to a CO2 emissions-based system a few budgets ago. If that system remained in place, there would have been a 40% reduction in receipts in 15 years. That would not be sustainable because we would be unable to fund our local services. Car emissions are lowering with the advent of new technologies and continuing research in the motor industry. It was ludicrous to encourage people to change to a lower emissions car which attracted a lower motor tax rate, although this was during the Celtic tiger era when money as plentiful. However, many younger people now own second hands car which were made prior to 2008 and they cannot afford to change. As a result, they are paying high rates of motor tax to drive a 1 litre or 1.4 litre car to subsidise those driving cars much larger 2 litre or 2.5 litre cars that were bought post-2008. They pay half the tax young people pay for driving older cars.

I support the Bill. I agree with many of the sentiments expressed by Senator Barrett. As he said, cost-benefit analyses should have been done because some motorways should not have been built as they were not cost efficient. However, motorways were one of the positives from the Celtic tiger era. Road fatalities have reduced as a result of the motorways and improvements in our road network generally. It is important that local government continues to be funded. Almost ¤1 billion of the yield from motor tax goes back to local government, with 30% for local roads, 60% for general purpose while the remaining 10% goes to the Exchequer. Unfortunately, ¤46.5 million was taken by the Exchequer last year while, this year, ¤150 million will be taken to balance the books to get the country back up and running again. Tonight will be historic, as the bank guarantee ends at midnight. That is another step on the way.