Michael McGrath (Cork South Central, Fianna Fail)
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509. To ask the Minister for Transport, Tourism and Sport the estimated cost of implementing a disc free motor tax regime as in certain other countries; the potential law enforcement issues that may result in such a regime; the overall and individual cost of providing motor tax discs; the rationale for charging motorists more for paying biannually and quarterly; and if he will make a statement on the matter. [3481/18]

Shane Ross (Dublin Rathdown, Independent)
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As the abolition of the paper motor tax disc is not under consideration at the present time, the potential cost has not been evaluated.

Any replacement of the requirement for the display of discs on vehicle windscreens would need to be considered in the context of the level of application of Automatic Number Plate Recognition (ANPR) by An Garda Siochána, in order to ensure that adequate enforcement levels are maintained.

As you may be aware, the abolition of the motor tax disc took effect in the U.K. from 1 October 2014.  In that jurisdiction, a vehicle excise duty evasion survey is carried out on a bi-annual basis.  The results of the survey carried out in 2015, the first following the abolition of the disc, found that the rate of unlicensed vehicles observed on the road was much higher than had been observed in the previous survey in 2013, prior to the abolition of the disc.  The survey concluded that the increase was probably due to the changes in the vehicle licensing system which took effect from October 2014.  The 2017 survey, published on 16 November 2017, found that the rate of unlicensed vehicles observed on the road had increased yet further since the 2015 survey - with significant adverse implications for revenue.

The Cost of Insurance Working Group, chaired by the Minister for Housing, Planning and Local Government, Mr. Eoghan Murphy, T.D., in his former role as Minister of State at the Department of Finance, published a Report on the cost of motor insurance in January 2017.  The Group considered the issue of the abolition of the paper-based insurance disc as part of its deliberations.  The decision of the Working Group was that it was not recommending the phasing out of the paper-based insurance disc.  In arriving at its conclusion, the Group noted the experience in the U.K. following the removal of the paper motor tax disc and, in terms of enforcement, set out that Ireland is not yet in a position to underpin an enforcement regime where technology would be the primary method of enforcement.  In relation to the use of ANPR, the Group recommended that the phasing out of the paper insurance disc should be reviewed in the future as the development of technology progresses.  The continued use of the paper motor tax disc will also be kept under review in that context.

The cost of producing a single paper disc or the overall volume of discs (some 5m annually) has not been compiled in my Department.  There are a range of costs incurred in the provision of the overall motor tax service, including both staff and non-staff costs, such as payment processing fees and the provision of technology support services.  The 2016 Report of the Office of the Comptroller and Auditor General on the Administration and Collection of Motor Tax estimated, based on 2014 figures, that the average cost of transacting a motor tax payment in a motor tax office was €10, with a cost of €5 for an online motor tax transaction.  The Report estimated that the total cost of the motor tax service in 2014 was €48.7m, €15.3m in respect of the online service and €33.4m in respect of motor tax offices.  The latter figure includes costs of €14.3m for the provision of motor tax services other than processing of motor tax payments, such as provision of information to certain statutory bodies, including An Garda Síochána and local authorities.  The Local Authority Annual Financial Statement 2015, the most recently available Statement, gives a total local authority cost of €37.4m in respect of motor tax services in 2015.

€12.5m was paid from the Local Government Fund to the Driver and Vehicle Computer Services Division of my Department for the cost of operation of the online motor tax service in 2015 and again in 2016.

In respect of payment periods, motor tax is payable on an annual, half-yearly or quarterly basis.  The rates applicable for the half-yearly and quarterly options are 55.5% and 28.25% of the annual charge, respectively.  These relativities have remained generally consistent since the 1960s. 

The differential takes account of the extra workload for staff in motor tax offices and the Driver and Vehicle Computer Services Division in processing non-annual renewals, as well as the resultant administrative and printing costs that arise, including the issuing of renewal notices.  Each quarterly renewal of motor tax follows the same administrative procedures as the annual renewal process. Consequently, renewing on a quarterly basis generates four times the workload of an annual renewal for the equivalent period.

The loss of income that would arise from changing these arrangements would have a negative impact on the total collected via motor tax and would have to be borne elsewhere in the motor tax system or through the taxation system generally.