According to the Irish Times, an extension of charges to national roads, extra levies on those who do not pay their motor tax online, and, a major reduction in the number of city and county managers, are among a series of proposals aimed at saving over €500 million in the State’s 34 local authorities.
The Local Government Efficiency Review Group (An Board Snip Eile) has also recommended that tolling charges be extended from motorways to national roads. It has argued this would be consistent with Government policy on the environment by incentivising road users to use other transport. It would also allow a stream of revenue for local councils to invest in local roads.
The Government collects revenue from drivers in multiple ways.
- Motor Tax
- Insurance Levy
- Fuel Excise (VAT)
- Tolls and Parking
- Levies and other taxes
Minister for Environment, John Gormley has stated that motor tax receipts are paid directly into the local government fund which is ring fenced for local government purposes. Each year, the motor tax receipts are supplemented by an exchequer contribution. The fund is used primarily to finance regional and local roads and the general purpose needs of local authorities. In 2008 motor tax receipts were circa €1.1 billion and this was subsidised by circa €500 million or 30% by the exchequer.
VRT take was down €700 million in 2009 when compared to 2008. A mere €375 million was taken in 2009. There was €328.6 million taken in January 2008 alone. The majority of the fall is due to the 66% drop in new registrations (Cartell.ie was first to identify the sales slump). However, there was a massive shift towards low emitting CO2 vehicles as part of the new 7 band VRT rate system and this would have further reduced the take. At the start of the year, the SIMI predicted that, with the assistance of the scrappage scheme, 70,000 new cars would be sold for the entire year. The numbers sold have surpassed this target already in 2010, and this should see VRT receipts increase and swell the coffers somewhat. None the less, the VRT take for 2009/2010 goes to central government and it doesn’t look enough to run the Department of Transports costs of €530 million. Therefore there will be no additional cash available for the exchequer contribution to the local authorities.
An increase in motor tax would be very unpopular given that the entire system was changed from a cubic capacity to a CO2 based system to encourage us to buy lower emitting vehicles. The Board Snip report suggested that a handling fee be introduced for processing motor tax payments that are made in person or by post rather than online. This, the report concluded, would recognise the much higher staff costs of manual processing. However, commercial vehicles require taxing to be done manually as they require a DOE Certificate to be sent in with the payment annually. Commercial vehicles don’t receive an online pin to tax the vehicle so this could be seen as discriminative to the business community. Furthermore, those whom are computer illiterate or have no access to the internet will find this to be an attack on them.
Levies and other taxes
It is unknown if the motor insurance levy will be increased in this years budget from 3%. It is unlikely however given that it was increased from 2 to 3% in April of last year. Excise and a Carbon tax have increased the cost of fuel over the past eighteen months according to the AA’s Conor Faughnan. Will this rise again in this years budget? The motorist already contributes €2bn from Petrol and Diesel to the exchequer.
The idea of putting more tolls on the M50, M1 and national roads is hard to believe. Check out newstalk.ie to see how Brenda Mc Dermot and Tony Toner tackled this issue on Mondays Motormouth. They basically slated it. In fairness, the money has to come from somewhere to fund the councils or local authorities but more tolls especially on national roads is probably too much to bear on the motorist.