Renewing motor tax quarterly or twice yearly cost motorists €100m over three years

Drivers paid €35m on motor tax surcharges for paying either half-yearly or quarterly in 2024.

More than €100m has been collected in motor tax surcharges over the last three years from drivers who opt to pay every three months or twice a year.

The millions collected in extra revenue has led to calls for reform to how motor tax is paid, with one TD arguing drivers who pay in stages should not be penalised financially.

It costs more to pay motor tax in quarterly or half-yearly amount rather than in one lump sum for the entire year.

New figures provided to Social Democrats TD Aidan Farrelly outline drivers paid €35m on motor tax surcharges for paying either half-yearly or quarterly in 2024.

A total of €22.7m was paid by those renewing quarterly, while the remaining €12.4m was paid by individuals renewing on a half-yearly basis.

Similar amounts were paid in 2022 (€35.7m) and 2023 (€35m).

In total last year, there were 2.25 million motor tax discs issued while there were 2.1m motor tax discs issued on a quarterly basis.

Just 674,078 tax discs were issued on a half-yearly basis.

Motor tax is a legal requirement for drivers if they want to drive their cars in a public place, with the tax rate changing depending on the type of vehicle.

Mr Farrelly called on the Government to reform how the tax is collected and to remove any surcharges for not paying yearly to avoid punishing those who cannot afford to pay the full sum in one go. 

“I would urge the minister to consider equalising the options for payment of motor tax,” Mr Farrelly said.

The Government has argued a surcharge was in place to take “account of the extra workload” for staff in processing motor tax on a half-yearly or quarterly basis. 

It has also cited the additional costs to “printing and posting of additional motor tax discs and renewal notices”.

Transport minister Darragh O'Brien argued the loss of revenue by equalising the rates would have a 'negative impact on motor tax revenue and would have to be borne elsewhere in the motor tax system or in the taxation system generally'. Picture: Niall Carson/PA Wire

Transport minister Darragh O’Brien said: “Each quarterly renewal of motor tax follows the same administrative procedures as the annual renewal process. Consequently, renewing on a quarterly basis generates four times the workload of an annual renewal for the equivalent period."

However, the Social Democrats TD has argued against that rationale, citing the incoming plans to go paperless for motor tax discs.

"When the motor tax system becomes paperless, it will alleviate the administrative burden the minister claims to be an obstacle,” Mr Farrelly said.

There are many reasons a person may not have the full fee up front, and they should not have to pay more for a public service as a result.

Mr O’Brien, in his response, argued the loss of revenue by equalising the rates would have a “negative impact on motor tax revenue and would have to be borne elsewhere in the motor tax system or in the taxation system generally”.

He said a decision to change the practice of the surcharge would be made “in the context of budget preparations”.

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Plans to remove the requirement to display a physical tax disc were approved by the previous government, with former transport minister Eamon Ryan describing the paper discs as no longer practical.

The new system would see tax information be readily available to gardaí through a vehicle’s registration plate, giving them access to information on whether or not the car is taxed, or stolen.

Mr Farrelly said he would be suggesting amendments to the draft laws, known as the National Vehicle and Driver File Bill 2024, to remove the surcharges if the Government does not act first.

Figures from the CSO for 2023 outline there was a total of €683m collected in household motor tax.