THE increase in petrol and diesel duty angered both the Society of the Irish Motor Industry and the Automobile Association. Mr Cyril McHugh, SIMI chief executive, thought it failed to recognise the social and economic importance of transport in rural Ireland. We have now got a situation where over 70 per cent of the retail cost of petrol goes in tax."
He welcomed the increase in the capital allowance for business car users from £14,000 to £15,000, and the incentives for smaller businesses with the lowering of the Corporation Tax rate.
But he said "a real opportunity" had been missed to reduce Vehicle Registration Tax on new cars. "A reduction to 20 per cent as we had suggested would have meant a significant increase in new car sales as well as bringing car prices closer to those of our European counterparts. It's deeply disappointing."
Petrol and diesel prices vary considerably in the Republic but the averages for regular unleaded and diesel were 59.54 and 58.49 pence per litre. With the Budget increase of 1.5 pence per litre, prices are almost the same as in Northern Ireland.
According to Mr Conor Faughnan of the Automobile Association, the competitive advantage enjoyed by filling stations south of the Border has been ended. But his main criticism was that the increases were inflationary. "They were cited recently as one of the factors increasing the inflation rate to 1.9 per cent.".
Mr McHugh admitted the Budget's overall effect would put extra pounds in pockets, which was good for consumer confidence.
A more sanguine view was taken by Mr Arnold O'Byrne, managing director of Opel Ireland. It was a good Budget, he said - "good for the economy, good for the consumer and good for confidence." He claimed the fuel increases would not have a major impact. Motorists bought their fuel in multiples of £10 or £20 and most did not know the price of a litre or a gallon.
He predicted that last year's record car sales of over 115,000 would be exceeded. "It's going to be another good year for the Irish motor industry because of the continuing scrappage scheme and low interest rates as well as the mood of confidence that prevails."
Mr Eddie Nolan, Ford's chairman and managing director found it "an encouraging Budget" which would do much to sustain the current momentum of the economy. But he said it was regrettable the Minister did not address the fiscal treatment of imported used cars, particularly in view of his welcome decision to extend the scrappage scheme.