The Society of the Irish Motor Industry (SIMI) has called for any change in the existing Vehicle Registration Tax (VRT) system, which nets the government some €1.25 billion per annum, to be one that encourages the purchase of newer, cleaner vehicles, but at the same time does not encourage the continued importation of larger, higher polluting vehicles into the state.
In SIMI's pre-budget submission, which was prepared in association with Goodbody Economic Consultants, SIMI points out that it continue to oppose VRT as a taxation system, pointing out that it is "anti-single market and anti-EU, at least in spirit if not in law", and that the result of this taxation over the years has meant that "the market in both new and used cars is enormously distorted".
It also creates a situation, it says, where newer technology such as cleaner diesel engines have been discouraged purely because of their engine capacity.
However, SIMI welcomed the Minister for Finance's invitation earlier this year for interested parties to make submissions regarding revision of the current VRT system.
SIMI is proposing a new lower rate of VRT of 17.5 per cent to cars under 1,400cc with CO2 emissions of less than 145g/km and 20 per cent to vehicles up to 1,400cc with CO2 of between 146g-190g/km and vehicles of 1,401cc to 1,900cc with less than 190g/km.
However, unlike the option presented in a recent Department of Finance discussion document, SIMI is against an increase in the top rate of VRT to 35 per cent, as this would, the society believes, serve only to further encourage the importation of cheaper used imports, the average age of which is six-and-a-half years, with 33 per cent of them having engine sizes of 1.9-litres or over, compared to 20 per cent of newer registrations.
While this system might create a shortfall in revenue for the Government, SIMI believes that any shortfall could be recouped through usage taxes such as fuel or road taxes.
The submission points out that there were 54,000 used cars imported in 2006, and with VRT discouraging an export market this means that we are gaining older, higher emission vehicles into the State. The introduction of a VRT refund scheme for exported cars and the reintroduction of the car scrappage would, SIMI believes, go some way to removing these older vehicles from the State's roads.
It also says that the existing rates for commercial vehicles should be retained, as well as the incentives given for hybrid and flexifuel vehicles.
"If the Minister is genuinely concerned with reducing CO2 emissions, then he should encourage the renewal of the national car fleet, as other countries have done in embracing emission saving technology," said Cyril McHugh, SIMI chief executive.