THE MOTOR industry has warned the Government against attempting to recover lost tax income from the motoring public.
With car sales down 16.7 per cent so far this year and dealers complaining about forecourts full of depreciating stock, the Society of the Irish Motor Industry (SIMI) has called for there to be no more changes to the new emissions-based VRT and road tax system in the upcoming Budget.
Tax revenue from the motor industry is expected to be down this year. That's partly due to falling sales, with 35,000 fewer new cars expected to be sold this year. It's also due to the success of the new emissions-based regime, which has reduced tax revenue as buyers opt for lower emission cars, resulting in lower VRT and motor tax payments. According to SIMI, the CO2 on new cars has dropped from 162g/km to 142g/km.
It has been feared within the industry that the Government might consider adjusting the recently introduced tax bands in order to maintain its motor industry income at levels from previous years.
In 2006, the Government revenue for motor-related taxes was in excess of €5.5 billion, according to SIMI, of which €1.25 billion was in VRT. "The fall in sales and the fact that buyers have opted for lower-taxed cars means there will certainly be a fall in tax revenue, but any shortfall should not be made up for with a purchase tax, but rather, if necessary, by a usage tax," says Alan Nolan, director general of SIMI.
"The move towards a CO2-based VRT and taxation system (from July 1st) has made a difference in reducing the CO2 emissions for new cars bought since then," he says. "However, there has been something of a hiatus in the industry and what we now need is a period of stability and it would be counter-productive to make any changes."
As an incentive to kick-start flagging sales, the organisation is calling for the introduction of an environmentally focused scrappage scheme, similar to that operated between 1995-1997. Nolan is also calling for a crackdown on foreign-registered cars by Irish drivers. "There has been a laxity in enforcement on the number of drivers driving on UK number plates. This is a scandal and it is damaging not only to the motor industry here, but also to state revenues," he says.
To reduce stock levels, some dealers have called for the introduction of a refund of VRT on cars exported to other markets.Trevor Musgrave, sales manager of Des Cullen Cars, said: "There is a much greater market for luxury and performance cars in the UK and if we could export such cars to there, we could probably offer 30-50 per cent more to a customer on their trade-in prices."