Ivor Callely (Dublin North Central, Fianna Fail)
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Question 94: To ask the Minister for Finance the level of vehicle registration tax generated each year over the past seven years; if he has received submissions for his consideration to reduce VRT; the position of EU harmonisation in this area; and if he will make a statement on the matter. [33066/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I am informed by the Revenue Commissioners that receipts for VRT in respect of the last seven years are as follows:

The figures reflect the large increase in car sales over this period which is primarily a function of Ireland's strong economic growth where disposable incomes have grown significantly partly driven by this Government's policy of reducing income tax. The receipts also reflect the increase in population and a greater demand for larger and more expensive cars.

Of course as with most taxes, I receive submissions for their reduction or abolition, and this is also the case with VRT. In their pre-Budget submission, The Society of Irish Motor Industry are seeking a reduction in the rates of VRT. However, VRT is a very important source of revenue for the Exchequer providing 2.9% of total net tax receipts for 2005. It is a valuable source of funds especially given this Government's strategy of reducing other taxes such as income tax and increasing the level of funding for vital public services such as health and education.

The European Commission published a proposal for a directive in relation to car taxes in July 2005 which supports the gradual abolition of registration taxes which it believes is impacting adversely on the functioning of the internal market. However, the aim of the proposal is that such registration taxes would be replaced by higher circulation taxes (such as Ireland's Motor Tax) which would have a CO2 element or possibly increased excise taxes on fuel. VRT would also be required to have a CO2 basis in the period up to its abolition.