VAT to be charged at tolls owned by State

VALUE ADDED TAX at 21 per cent is to be applied to State-owned tolls at the West-Link Toll Bridge on the M50 and the Dublin Port Tunnel, under a ruling from the Revenue Commissioners.

The tax, which is due to come in to effect from July 1st, will be absorbed by the National Roads Authority – at least until the outcome of an appeal against the Revenue decision.

Should the roads authority fail in its case, it is likely that private motorists will face a rise in toll charges.

The move would see the highest charge for using the Port Tunnel during peak times rise from €10 per journey to €12.10. The lowest charges for using the tunnel would rise from €3 to €3.63.

On the West-Link bridge, the basic charge of €2 would rise to €2.42 while the higher charge of €3 would rise to €3.63.

The change will not affect the net position of commercial vehicle owners as they can claim back VAT. However, the move could result in a possible double payment for private users of the West-Link bridge.

Private motorists previously paid VAT on their toll charges when the bridge was in the ownership of private company National Toll Roads.

When the State, which does not charge VAT, bought out the West-Link bridge from National Toll Roads in August 2008, the price to private cars did not drop and the VAT amount was absorbed by the roads authority.

Private motorists are now therefore facing the prospect of a 21 per cent hike in toll charges, should the roads authority lose its appeal with the Revenue Commissioners.

About 100,000 vehicles use the West-Link bridges each day and the roads authority has calculated the effect of the VAT change would be approximately €17 million per year.

This is the amount the authority would lose if the VAT charge was not passed on to the private motorist. It is expected that the authority would not be willing to absorb this cost indefinitely.

A spokesman for the roads authority said a decision would be made on a possible charging change after the appeal.

He pointed out the VAT changes were ultimately a result of an EU ruling that the State’s ability to abstain from charging VAT was a distortion of the internal market.

The EU took the view that not charging VAT gave State-owned industries and services an unfair advantage over their private sector competitors. All of the non-State-owned tolls on motorways across the Republic charge VAT on their tolls.

The Revenue Commissioners said that, following the EU ruling, VAT is to be applied to all public bodies from July 1st. The Revenue said it could not discuss individual cases.

The Dublin Port Tunnel was never in private ownership and so private motorists have never paid VAT on this toll while lorries can use the tunnel free.

From the end of this year, there will be two tolls on each of the motorways between Dublin and the regional cities, except Waterford which is to have just one.

Tolls also apply on the M4, M3 and M1 motorways towards Sligo, Cavan and the Border with Northern Ireland respectively.