Renua proposes plan to scrap motor tax

Motor tax should be abolished and replaced with a pay-at-the-pumps charge which would ultimately save motorists and the State money, according to Renua Ireland.

The proposal will form part of the party’s pre-budget submission, which it and other opposition parties will launch this week. Fianna Fáil will propose reducing tax on savings, helping low and middle-income workers by widening the USC bands and special tax credits for the self-employed.

Renua believes the current motor tax system is archaic, inefficient, and costly to operate. It wants to replace motor taxes with a direct levy on fuel that is collected at source. This would add 3c to the price of a litre of petrol and 4c to diesel. The levy would be capped at a fair rate for hauliers and public transport licenses.

Party strategists believe the change would encourage people to drive more efficient vehicles. Furthermore, they claim possibly up to 40% of motor tax income presently goes on administration costs.

“This is a policy that combines green principles with smaller government,” said a party source.

Renua Ireland leader Lucinda Creighton will unveil the budget plans today. They are expected to include plans for a flat rate of tax at 23% — if the party was put in power.

Renua Ireland leader Lucinda Creighton

The party says this would apply on all income, including social welfare. However, the party would also scrap the USC, employers PRSI, and normal income tax.

The proposals overall, say the party, would increase disposable income for a family with an income of €56,000 per year by €2,700.

The abolishing of tax shelters and reliefs would help fill any gap in the state’s revenue intake, the party says.

Elsewhere, Fianna Fáil will also launch its own pre-budget plans this week, which will be watched carefully by the Coalition parties.

It is understood that Fianna Fáil’s proposals will include widening the USC bands by between €3,000 and €4,000. This would mean USC would not kick in for low paid workers before €21,000, as opposed to the current level of €17,500.

Fianna Fail Leader Micheál Martin

The party will also propose reducing Dirt on savings from the current 41% and reducing capital gains tax levels. Plans to fund a reduction in hospital waiting lists, more money for housing adaption grants and a sugar or sweet tax will also be outlined.

Sinn Féin, meanwhile, will propose abolishing water charges and property taxes, which it says would save families €600.

It will also outline a €400m capital spending plan for next year, to boost “austerity hit public services”.