The Minister for Finance's proposals to convert the cost of existing taxi licences into tax breaks have been dismissed as inadequate by the National Taxi Drivers' Union (NTDU).
With most taxi-drivers paying in the region of £2,000 to £3,000 a year in tax, the owner of a plate previously worth £80,000 would not recoup its value for up to 40 years, according to Mr Tommy Gorman of the NTDU. Figures supplied by the union indicate a taxi-driver who owns his own car and works 70 hours a week will take home £10,000 a year. On this basis their annual tax bill will be about £2,000 to £3,000.
The NTDU figures assume the driver bought a plate in the last five years when they would have paid in the region of £70,000 to £80,000. Banks and building societies are not prepared to lend money against a plate and as a result most drivers remortgaged their homes. They repay the debt over a 15- to 20-year period and at current mortgage rates the repayments work out at £80 to £120 a week. The drivers are allowed claim the interest against tax already, which will further undermine the value of the tax-based compensation measures mooted by Mr McCreevy.
The drivers also have to pay for insurance and maintenance of their vehicles. Insurance can cost up to £3,000 a year and keeping a car on the road requires between £1,000 and £2,000, according to Mr Gorman. The only concession the drivers get is a flat £49 road tax fee. Diesel bills can be up to £20 a day while car radios cost between £20 and £53 a week to rent.
When these costs and the costs of financing the car are taken into account the average taxi-driver incurs bills of £25,000 a year, says the union. The situation is slightly different for drivers who bought licences in recent years from local authorities. These drivers paid £15,000 for licences but had to provide a car that was accessible to wheelchair users.
The NTDU points out these drivers have to pay more for their vehicles. The wheel-chair accessible taxis cost in the region of £30,000, says Mr Gorman. The bulk are financed over four to five years at about £650 to £700 a month. The owners of the plates issued for wheel-chair accessible taxis will be refunded the full amount they paid for them less the £100 fee that will be charged for new plates from now on, according to a spokesman for the Minister for State at the Department of the Environment.
Many taxi-drivers hire out their car to another driver or "cosy". The plate owner can expect to get about £150 a week from a cosy during the day and in the region of £180 at night. The extra use of the car reduces its inherent value, according to Mr Gorman.
The exact nature of the concessions being offered by Mr McCreevy will not become apparent until next month's Budget. Yesterday Mr McCreevy said he will bring in legislation that will "treat licence plates as depreciating assets for tax purposes". He explained this would allow plate owners "write off the amount they paid against their tax bills for a number of years".
