Motorists face tax bill for ‘off the road’ cars

CASH-STRAPPED households will have to pay tax for cars that are “off the road” under controversial plans being drawn up by the Government.

The move to close the loophole that exempts the payment of motor tax when a car is parked up will further anger motorists already facing a range of increased costs after the budget and families who have been forced to take second cars off the road.

The measure is set to net the state €40 million per annum — just short of the €47m per annum the Government will raise in the 7% motor tax increase announced in the budget.

According to an internal Department of Transport document, it has been agreed in principle with the Department of the Environment that legislation should be introduced to close the legal provision for non-payment of motor tax for a period while a vehicle is reported to the gardaí as being “off the road”.

The document states: “It is believed that there is considerable abuse of this provision and that the legislative change proposed is in the interest of overall fairness.”

The spending review states: “The Department of the Environment will have responsibility for the legislation and it has been agreed that the proceeds should be shared equally between roads and local authorities.”

The briefing document states: “The full-year benefit to this department, when fully implemented, will be at least €40m. We have assumed that it will take a couple of years for a full culture of compliance to emerge, and have therefore built in an expectation of around €13.5m in 2012, €26m in 2013 and the full €40m in 2014.”

Figures provided by the Department of Transport show motor tax receipts were €1.06 billion in 2008, reducing to €1.024bn last year, with final receipts for 2011 expected to be in the order of €998m.

Director of policy with AA Ireland Conor Faughnan described the new measure as “unfair”.

“Natural justice would suggest that if you are, say for example, a doctor and working abroad for six months, you should not have to tax your car back in Ireland for that time when it isn’t in use.”

Mr Faughnan said the new measure “has nothing to do with good governance. It is just another way of raising taxes and clearly penalises motorists who don’t have their cars on the road”.

Mr Faughnan said the move is not about closing a legal loophole. “It wasn’t a loophole. It was clearly provided for, that if your car was off the road, you didn’t have to pay road tax.

“The €47m from the increase in road tax and the €40m from the closing of this provision is a lot of money, but it is quite small compared to the €4bn the Government generates in fuel taxes.

“There are a suite of taxes against the motorist that are riddled with unfairness,” he said.

However, Fianna Fáil’s transport spokesman Timmy Dooley said the loophole is being widely abused.

“From reports from Garda stations around the country there has been, I understand, a significant element of tax evasion going on by motorists concerning the ‘off the road’ provision.

“The McCarthy report identified this loophole and the closing of it can generate significant revenues and it would lead to greater equity in the paying of motor tax,” he said.