Committee told ending VRT would double road tax

ROAD tax would jump to €960 a year if we dropped Vehicle Registration Tax (VRT) on new cars, an Oireachtas committee heard yesterday. Currently, the average road tax is €400.

And replacing VRT with higher fuel taxes would increase prices at the pump by over 20 cents a litre.

Department of Finance official John Burke gave this information to the Joint Committee on Finance and the Public Service, meeting to consider EU proposals on passenger car-related taxes.

The EU wants registration taxes in the 25 member states abolished by 2016. The proposal also seeks refunds when passenger cars registered in one EU state move permanently to another. Also mooted is restructuring of the tax base so that by December 31, 2008 at least 25% of total car tax would be linked to carbon dioxide (CO2) emissions.

Monthly sales of new cars reached a record in January, exceeding 42,000. The previous highest monthly sale was 41,878 in January 2000.

Mr Burke said VRT took in €1.15 billion in 2005, and while not popular, it had not impacted negatively on car sales, evidenced in the 11.5% increase in new 2006 registrations.

“Given such a buoyant market, any move towards reducing taxes on new cars could be seen by many as being unnecessarily reducing the revenue streams required to fund ... public services,” Mr Burke said.

Revenue official Kieran Coile revealed that more than 35,000 used cars on which VRT was paid were imported in 2005. But there were no figures for the thousands of cars EU non-nationals bring under temporary importation.

Mr Coile explained EU temporary workers were exempt from Irish road tax and NCT tests. Last year Revenue patrols “challenged” 11,876 vehicles. It was found 1,405 paid VRT, 54 were seized, five detained and 666 “exported.”

Committee chairman Seán Fleming said they had a situation where such cars were not recorded anywhere, or subject to NCT testing, and the gardaí had no way of identifying them.