Dinny McGinley (Donegal South West, Fine Gael)
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Question 135: To ask the Tánaiste and Minister for Finance if he is satisfied that the delay in implementing changes in VRT has not created perverse incentives in the short term. [2140/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I wish to draw the Deputy's attention that on 6 December 2006, as part of Budget 2007, I announced that it was planned to introduce changes to the VRT system to take greater account of environmental issues, and in particular Carbon Dioxide (CO2) emissions. The Programme for Government of June 2007 re-affirmed the commitment to introduce measures to further weight VRT in favour of cars with lower emissions.

A public consultation process was carried out by my Department. The consultation process evidenced broad support for a reorientation and rebalancing of VRT. I announced in my Budget Statement on 5 December 2007, my plans to introduce a revised VRT system, based on CO2 emissions.

Changing the VRT system to make it take greater account of CO2 emissions levels is a significant change. It is therefore desirable that members of the public be given reasonable notice of any changes being introduced. In addition, the motor industry indicated that it needed at least six months prior notice of any substantial change being made to the system, in the light of the advance ordering arrangements for new cars in the industry. Furthermore, the Revenue Commissioners' technical and administrative processes required amendment in order to facilitate the revised VRT system.

Having examined the matter, it was considered therefore that any proposed VRT changes should be effective from around mid-2008; and the new system will be introduced, as announced, on 1 July 2008. I am satisfied that this lead-in period is both necessary and appropriate.