Tax vehicle use — not ownership

THE Department of Transport’s 2020 Vision for Sustainable Transport includes a comment that Ireland had the fifth lowest petrol tax excise rate in the EU prior to its latest enlargement.

The report is silent on the fact that Ireland also had one of the highest annual motor tax rates in EU-15.

A report issued by the Commission for Integrated Transport in Britain says Ireland has the second highest taxes on vehicle ownership out of 14 European countries surveyed, while we have the third lowest taxes on use.

What does this mean in real terms? Compared with Britain, which has high fuel costs and lower annual registration costs, if you own a car with a 1500cc engine and travel 15,000km per annum, it will cost you approximately the same in Ireland as in Britain. This is despite our lower petrol costs.

The combined Irish motor tax and petrol excise system means that compared with our neighbours, you are worse off in Ireland if you drive less kilometres per annum and better off if you drive more.

If I understand the Government’s environmental goals correctly, this is precisely the reverse of the policy outcome they wish to achieve.

It does suggest one simple and revolutionary step to address the environmental impact of car usage in Ireland: the abolition of motor tax and its incorporation into a higher tax on petrol.

Concentrating on a ‘tax on use’ would provide a simple-to-administer ‘user pays’ approach. This would

* Encourage drivers to limit mileage and encourage use of alternative transport and car pooling.

* Reward economical driving styles.

* Encourage ownership of fuel efficient (low emission) cars.

* Not need complex new administration — the excise and VAT collection systems already exist.

* Achieve a small reduction in public service numbers.

Most importantly, this approach would be very easy for the motorist to understand — a fundamental issue in creating a sustainable transport policy for the future.

This seems to align very closely with the objectives set out in 2020 Vision for Sustainable Transport.

And because it is easy to explain and administer, it could be introduced well in advance of 2020.

Donal Fellows

Cois na hAbhainn

Bailick Road

Midleton

Co Cork