Paul McAuliffe (Dublin North West, Fianna Fail)
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266. To ask the Minister for Transport, Tourism and Sport if he has made inquiries regarding car tax versus fuel tax (details supplied); and if he will make a statement on the matter. [26388/21]

Hildegarde Naughton (Galway West, Fine Gael)
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Fiscal policy generally, including the appropriate levels of taxation to be raised from various sources for the Exchequer and hence the funding of our vital public services such as health, are matters in the first instance for my colleague the Minister for Finance. 

I can advise that there are no plans to replace the current system of motor tax with taxation on motor fuel. Gross motor tax receipts in 2020 were in the order of €940m. Maintenance of the tax base would, therefore, require a significant compensatory increase in fuel excise rates, with direct negative impacts on the rate of inflation and 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 could lead to an increase in cross-border fuel purchasing, further depressing the tax base and requiring a compensatory adjustment, either in 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.   

A mechanism would also have to be put in place to ensure that the National Vehicle and Driver File, the central vehicle register, could be kept up to date in the absence of the requirement to renew motor tax on, at least, an annual basis. 

Further, the Programme for Government 2020 contains a commitment to legislate to ban the registration of new fossil-fuelled cars and light vehicles from 2030 onwards, and to phase out diesel and petrol cars from Irish cities from 2030. There is also a commitment in the Climate Action Plan to accelerate the take up of electric vehicles to achieve a target of some 950,000 such vehicles on the road by 2030.   

The benefits of a fuel based tax would have to be weighed against all of these policy considerations and objectives before the change proposed could be contemplated.