EU court dims hopes of cheaper cars

MOTORISTS hoping for cheaper cars through the abolition of Vehicle Registration Tax have been dealt a blow by a recent ruling of the European Court of Justice.

Motoring organisations, including the Society of the Irish Motor Industry and the AA, have repeatedly called on the Government to reduce or remove the tax which can add up to 30% to the cost price of a vehicle.

VRT is payable on the first registration of a vehicle in the State.

Drivers claim the imposition of VRT prevents people from deriving the benefits of buying cheaper cars abroad and bringing them back to Ireland.

They argue the imposition of VRT - which raises around €800m each year for the Exchequer - runs contrary to the concept of the European single market.

However, a failed legal action taken recently by a Finnish woman against the Finnish government over its application of a vehicle tax means the Government is unlikely to face any pressure from the European Commission to remove VRT.

The European Court of Justice ruled that the Finnish government was entitled to levy a €3,400 tax on a car the woman had bought in Germany and imported into Finland when she moved home in 1999.

The Luxembourg-based court ruled that the tax imposed on the imported car did not breach an EU directive relating to the importation of personal property between Member States.

“The Treaty offers no guarantee to citizens of the Union that transferring their activities to a Member State other than that in which they previously resided will be neutral as regards taxation,” said the Court.

AA spokesperson, Conor Faughnan said that although VRT might be legally allowed, it ran contrary to the spirit of the EU’s principle on the free movement of goods and services.