Calls to scrap VRT as drivers hit for €946m

MOTORISTS were stung to the tune of almost €1 billion last year by the vehicle registration tax (VRT) imposed on cars.

Provisional figures from the Revenue Commissioners show VRT continues to be a veritable goldmine for the Exchequer, pulling in €946 million in 2004.

This represented an increase of 15% on 2003, when the State made €819.5m from VRT.

Last year’s figure is a 175% increase from a decade previously, when VRT earned the equivalent of €344m, although 154,132 new private cars were registered that year compared with 80,402 in 1994.

Those figures do not include value-added tax (VAT).

Motorist and consumer lobby groups have consistently argued for VRT to be abolished, saying it is effectively a double tax.

The Government refuses to scrap or reduce VRT, however, arguing that to do so would require an increase in personal income taxes to replace the lost funds.

But the representative body for the motor industry last night argued that the levels of VRT charged by the Government “severely penalise” Irish drivers when compared with motorists elsewhere in the EU.

“If you look at other countries in the EU, apart from a couple of exceptions such as Denmark and Finland, motorists are able to buy a car at a substantial reduction compared to motorists here in Ireland,” said Cyril McHugh, of the Society of the Irish Motor Industry (SIMI).

The European Commission believes VRT serves as an obstacle to the free movement of goods, because people importing cars could have to pay it twice.

The commission wants the member states which levy VRT to abolish it on a phased basis.

VRT is charged at 22.5% on cars of engine size up to 1400cc, 25% on cars between 1400 and 1900cc, and 30% on cars above 1900cc. But it is levied as a percentage of the expected retail price, rather than the car’s basic cost. This means that VAT is first added to the price of the car before the VRT is calculated.

VRT is not a tax on the car, per se, but rather a fee to register the vehicle with the Revenue Commissioners. New vehicles purchased from an Irish motor dealer will already be registered, and the VRT built into the price to the consumer. An individual importing a car from abroad, however, is responsible for registering the vehicle and paying the tax.