The Government is to announce a rise in motor tax of between 10 and 12 per cent today. The biggest once-off road tax rise in 10 years comes in the wake of the 3 cent per litre increase in the price of diesel and a rise in Vehicle Registration Tax (VRT) for two-litre engine cars announced by the Minister for Finance in the Budget on Wednesday. Miriam Donohoe and Chris Dooley report.
Motorists will also have to pay more for having their cars serviced and repaired as a result of the Budget increase in VAT, from 12.5 per cent to 13.5 per cent.
News of a road tax increase came at the same time as a warning last night from union leaders in both the public and private sectors that a new national partnership deal would be more difficult to achieve in light of the range of "stealth taxes" introduced by Mr McCreevy on Wednesday.
Mr Jack O'Connor, the vice-president of SIPTU, and Mr David Begg, general secretary of the Irish Congress of Trade Unions, warned last night the Budget was likely to take inflation above 5 per cent, and unless employers were prepared to "cough up" significant pay rises, workers would be left considerably worse off.
The Irish Times has learned that the motor tax increase, to be effective from January 1st, will be announced by the Minister for Environment, Mr Cullen. The increase will yield approximately €67 million in revenue and will affect all classes of vehicle.
Annual motor tax for an average sized 1.3-litre to 1.4-litre family car will rise by around €30, from €248 to €278.
Tax on a one-litre car will jump around €15, from €129 to €144, while road tax on a 1.6-engine car will rise €32, from €332 to €364.
The owners of a two-litre car will face a €70-a-year increase in road tax, bringing it from €458 to €528.
Commercial vehicles, such as buses and heavy goods vehicles, will also be hit by the increase, resulting in added costs for business.
Last year €560 million in car tax was collected by local authorities around the State.
A Government source said last night the increases would go towards improving the country's non-national road network, resulting in a direct benefit to drivers.
When broken down, the increases work out at between 29 to 58 cent a week, he added.
The road tax rise was agreed by Cabinet on Tuesday. The increase is a departmental matter, and it was decided to make the announcement separately from the Budget.
The last motor tax increase was announced in a separate statement from the then Minister for the Environment, Mr Dempsey, on Budget day in December 2000.
A Department source pointed out the increase is only the third since 1993. While the total car tax increase up to now has been 12 per cent in the past 10 years, inflation has risen by 33 per cent.
"So when you look at it like that, motor tax has not risen in line with inflation," he added.
Mr O'Connor of SIPTU, a senior negotiator for private sector employees, warned last night that the Budget was likely to take inflation above 5 per cent, notwithstanding Mr McCreevy's forecast of 4.8 per cent.
Unless employers were prepared to "cough up" significant pay rises, workers would be left considerably worse off, he said.
Mr O'Connor added that Mr McCreevy was mistaken if he believed payment of the benchmarking pay rises to public servants would be enough to secure a deal.
He said this view had also been expressed by public sector unions at an executive meeting yesterday of ICTU, at which the extent of union disaffection about the Budget became apparent.
Mr Begg said the Budget had increased both direct and indirect taxes on workers and failed to adequately address any of the critical issues in the social policy area, such as health and housing.
"Congress will now be seeking clarification from the Government and employers about whether they are serious about negotiating an agreement that will protect workers' living standards in the current period," he said.
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