Ann Phelan (Carlow-Kilkenny, Labour) | Oireachtas source

I will be very brief. I thank all the Senators who contributed to the debate. I will respond to the most pertinent of the wide-ranging and interesting contributions that were made, which give rise to much thought.

I assure Senator Barrett that it is recognised that unladen weight is not a satisfactory basis for motor tax. It is open to manipulation and it is out of line with the basis of taxation of commercial vehicles in other countries, which is generally based on gross design vehicle weight. The Minister for Transport, Tourism and Sport has established an interdepartmental working group to consider issues relating to the Irish haulage industry. In addition to the reduction in motor tax that has just been announced, the haulage industry is seeking a change in the basis of taxation from unladen to gross design vehicle weight and the introduction of road user charging. The group issued a consultation paper late last year to canvass the views of hauliers and other stakeholders on the options for reform of the commercial vehicle motor tax regime. Following consideration of these submissions, the group is to furnish a report containing recommendations on the future structure of commercial tax to the Ministers for Transport, Tourism and Sport, Finance, and the Environment, Community and Local Government. Any changes to the current structure will be considered in that context. It will be necessary to make amendments to primary legislation and technical modifications to the national vehicle and driver file. The likely date for implementation is from January 2018. The working group is also considering the feasibility of establishing and operating a road user charging system here. Given the technological requirements required to underpin a charging system, its introduction is a medium-term to long-term objective.

I note the comments that were made regarding electric vehicles. In budget 2013, a new band of €120 was introduced for electric vehicles with zero emissions. The rate for pre-2008 electric vehicles was reduced at the same time from €157 to €120.

I also note what was said about the polluter pays principle. There are no plans to replace the current system of motor tax with an additional tax on motor fuel. Motor tax receipts for 2014 were in the order of €1.159 billion. Maintenance of the tax base would require an increase in fuel excise rates of at least 20 cent per litre, which would have direct negative impacts on the rate of inflation and on economic competitiveness. Goods vehicles and other high-usage and high-mileage vehicles such as public service vehicles and buses would have higher costs under a pay-as-you-drive system. There would be other distributional effects, including on those with longer distances to commute. A significant increase in fuel duty would lead to an increase in cross-Border fuel purchasing, which would further depress the tax base and require a compensatory adjustment, either through further increases in fuel prices or elsewhere in the tax system, to make up the shortfall. The potential for an increase in fuel laundering is also clear. The benefits of a fuel-based tax would have to be weighed against these issues and many others before the change that has been proposed could be contemplated. In recognition of the lower average motor tax that is paid in respect of vehicles taxed on the basis of carbon dioxide emissions by comparison with pre-2008 vehicles, differential increases have been applied in recent budgets with a view to rebalancing the tax base while retaining the environmental incentive to purchase more environmentally friendly vehicles. The percentage increase in motor tax for passenger vehicles taxed on engine capacity was 7.5% in budgets of 2012 and 2013. This compares with average increases of 25.5% in budget 2012 and 19.8% in budget 2013 for vehicles taxed on the basis of carbon dioxide emissions. Any future changes to motor tax rates will be considered in the context of future budgets.

I note Senator Quinn's comments about the abolition of tax discs. Enforcement of motor tax, insurance and roadworthiness obligations and the instruments used to facilitate enforcement measures, including the application of number plate recognition technology, are matters for An Garda Síochána. Any change in the requirement to display on vehicle windscreens the discs mentioned by the Senator would need to be considered in the context of the application of number plate technology by An Garda Síochána generally, in order to ensure adequate enforcement levels are maintained. The abolition of the paper tax disc in the UK since the beginning of October 2014 was enabled by greater use of automatic number plate recognition in that jurisdiction, which allows the authorities there to pursue the non-payment of tax. There are no plans currently to implement a similar proposal here. I will pass on the issues raised by the Senator to the Minister for Transport, Tourism and Sport.

I put it to Senator Quinn that it should be taken into account that the number of toll points in Ireland is quite limited, and they are largely concentrated in the east of the country. That would bring its own issues as well. I think I have addressed most of the issues that were raised. I thank Senators for their co-operation.