Car registration tax to be phased out

Seth Brundle

murphaph wrote:

I expect (and would welcome) VAT on vehicles increasing to 25% (maximum permitted by the EU). I believe a tax based on the car's purchase price is a good thing as pricy cars attract more tax from the wealthy and cheapo cars attract less tax from the poor. I know that's a gross over-simplification, but why should the ordinary taxpayer subsidise Bentley drivers who's car of choice will now be cheaper. The tax has to come from somewhere afterall. Placing all the tax on fuel may also penalise the poorer in society as they may only be able to afford older, less fuel efficient cars and so on. It's not a simple area to tax fairly.

Placing the tax on the purchase price is (depending on the method used) silly. Currently the government are taxing people under a notion that it is fair to tax a bigger engine more than a small engine. This is not a green policy.

Also you ask 'why should the ordinary taxpayer subsidise Bentley drivers who's car of choice will now be cheaper'? Why would the taxpayer be subsidising Bentley drivers? The Bentley will be cheaper alright - to the point that its price is comparative to the rest of europe but with a 21% (or maybe 25%) VAT rate they will be donating a fair whack of money to the exchequer - more than many pay in PAYE per annum.

Also your point about placing tax on fuel being punitive to poorer people is to me nonsense. If they are that poor then surely they would not be able to afford the large single payments that are part of car ownership. can they afford their road taxes? Can they afford their insurance premia? [I know they can spread it out a bit but then they pay even more]. Also given that cars would be cheaper,they would be able to buy a more fuel efficient car compared to the current taxation system.

The system should follow the polluter pays policy. The current taxation system is grossly unfair. I pay about €850 per annum. Does my car emit more pollutants compared to someone who has a 1985 fiesta? Should the Monk pay proper tax rates on his big stretch hummer or just the paltry sum he is paying currently as it is a PSV? Or someone who does twice the mileage as me? if the fuel carried all the tax burden then it is fairer to everyone.

irishpartyboy wrote:

Scrapping VRT would have serious repercussions for the used car market and could cause the market to crash.. all the dealers existing stock would be worthless cos the VRT has already been paid.. so why would consumers bother buying the 2nd hands when they could buy the exact same car NEW, for cheaper if VRT is scrapped.

So although dealers dont make any money out of existing VRT, they definitely dont want it scrapped. Plus any private motorists out there could instantly lose anything from 200-16000 on the value of their car.. i.e. VRT already paid.

If it was phased ou then there shouldn't be much of a problem. the tax would presumably be reduced annually over a good few years to prevent market collapse.

ninty9er

I don't know where this idea came from, but I was at a Charlie McCreevy lecture lastnight (I know he's not minister for finance anymore), but someone asked if VRT should be abolished and he said any govt. would be stupid to do so, considering the amounts of money being spent on cars already. VRT isn't doing any harm. There are also too many cars on the road he said. Abolioshing VRT would further congest the roads.

While i don't agree with VRT I can still see where he's coming from

But why do you think VRT will be phased out

ambro25

murphaph wrote:

I expect (and would welcome) VAT on vehicles increasing to 25% (maximum permitted by the EU). I believe a tax based on the car's purchase price is a good thing as pricy cars attract more tax from the wealthy and cheapo cars attract less tax from the poor. I know that's a gross over-simplification, but why should the ordinary taxpayer subsidise Bentley drivers who's car of choice will now be cheaper. The tax has to come from somewhere afterall.

Erm...:rolleyes: Let's look at a current example:

Bentley €100k new + 30%VRT = €130k + 17%VAT= € 152.1k
cumulative tax = 52.1%

Punto €15k new + 22.5%VRT = €18.4k + 17%VAT= € 21.5k
cumulative tax = 43.3% - surprise, the cheapo car is less taxed :eek:

Now let's try it with your solution:

Bentley €100k new + 25%VAT= € 125k
cumulative tax = 25%

Punto €15k new + 25%VAT= € 18.75k
cumulative tax = ...25% - imagine that, the cheapo car is taxed just as much as the Bentley :eek:

I'm all for your social equality - especially when I get fortunate enough to buy a Bentley in a few years Note that I'd be happy enough for the VAT to be calculated on the car cost only (i.e. ex-VRT), and not on car cost + VRT, as if that's not double taxation (tax calculated on a tax), I don't know what is!
And in that respect, paying VRT on second-hand imported cars is just as much of a double taxation, if only because the OMSP is based on the depreciated value of the car which already includes a VAT component itself when that car was bought new!

Christ on a bike! It's basic maths! :rolleyes:

Stekelly wrote:

I love the way people are sayign the government will "sneakily" add it on to fuel to make up teh differecne.Yes, fuel will go up, but most like to the same price the rest of europe pay, ie a lot more than what we have been paying.

I would assume phasign it out will kill car sales for a few years as, generally, people should'nt be stupid enough to keep payign for something they won't have to pay for if they wait a while.

You're forgetting the 'this-year's-plate' thing in Ireland, however

ninty9er wrote:

I don't know where this idea came from, but I was at a Charlie McCreevy lecture lastnight (I know he's not minister for finance anymore), but someone asked if VRT should be abolished and he said any govt. would be stupid to do so, considering the amounts of money being spent on cars already. VRT isn't doing any harm. There are also too many cars on the road he said. Abolioshing VRT would further congest the roads.

While i don't agree with VRT I can still see where he's coming from

But why do you think VRT will be phased out

What a load of b*ll*cks (not @ ya ninty9er, but @ that McCreevy guy). I don't think I ever heard a more pitiful bunch of arguments by any (ex- or current-) government minister to justify a tax (and conveniently shift the blame attributable to the gvt's ineptitude for all things 'traffic' back onto motorist :eek: !). I think the only one who comes close to that one is good old Prescott at the time of the Two-Jags affair. Cop on, Minister: anyone who needs or wants to drive in ireland is already doing so, only VRT is keeping them from newer/more efficient/safer/less polluting models :mad:

Henry Ford III

Revenue from the motorist is reckoned to be €4.5 billion per annum, between VAT, VRT, excise duires on taxes on fuel, etc.

I hate VRT and the crazy price of cars here, and would love to be able to afford to drive in something fancier.

The reality however is that even when illegal VRT is reduced and gradually phased out, the tax will be collected some other way from the motorist.

€5000 per annum in road tax anyone?

full forward

Is VRT costing Lives? It does cause manafacturers to strip out some expensive safty equipment to keep the price down. eg active seats or extra airbags, stability control etc.

Also manafucturers are forced to bring in special smaller engines for countries with high VRT. Slower cars cannot overtake safely and could be more likly to have an accident.

The agrument sometimes used here is that safty equipment will cause people to take more chances and therefore increase accidents. Thats like saying umbrellas cause rain. If a bus skids on ice and hits my car would I not be better off with extra safty equipment? Would the safty equipment have caused the accident? I think not.

I seems like keeping your children alive is taxed as a luxury in backward old Ireland.

Gurgle

irishpartyboy wrote:

So although dealers dont make any money out of existing VRT, they definitely dont want it scrapped. Plus any private motorists out there could instantly lose anything from 200-16000 on the value of their car.. i.e. VRT already paid.

Bottom line - The national dealership cartel is a major party sponsor. No change will be made that would affect that cheque. There will be some workaround found so that the government makes just as much money and the dealerships don't lose out.

ambro25

Gurgle wrote:

Bottom line - The national dealership cartel is a major party sponsor. No change will be made that would affect that cheque. There will be some workaround found so that the government makes just as much money and the dealerships don't lose out.

Sounds increasingly like a swap of reduced VRT for increased VAT, which would maintain the private second hand values.

€5000 per annum in road tax anyone?

Maybe not 5k but certainly 1k... and petrol hike more likely, methinks, the good old "boiled frog syndrom"

Gurgle

ambro25 wrote:

Maybe not 5k but certainly 1k... and petrol hike more likely, methinks, the good old "boiled frog syndrom"

Not quite sure what a boiled frog syndrome is, but sounds like they will make new cars cheaper and spread the lost revenue across all drivers.
But that can't be right, that would be like taxing poor people as much as rich people, which couldn't possibly be a policy for our socialist government.:rolleyes:

Henry Ford III

Cars will not get cheaper. Illegal VRT has been here for a while, and it'll be replaced by something equally illegal. Number plate tax perhaps?

The govt. cannot afford the loss in revenue. If they stopped wasting taxpayers money perhaps they could but that's an entirely different matter.

ambro25

Gurgle wrote:

Not quite sure what a boiled frog syndrome is

(i) Pour cold water in pan
(ii) Place frog in pan
(iii) Place pan on stove
(iv) Heat gently to a simmer (add garlic and herbs to taste )
(v) Frog will not jump out at any stage

= Frog eventually boiled (scientifically proven).

I'll let you draw your conclusions as to the wisdom of this analogy, when contemplating how the GVT might tweak taxes here and there to balance the budget at the time of scrapping the VRT.

Wouldn't surprise me one icky little bit if we ended up paying more for motoring around Ireland after they've scrapped the VRT

Seth Brundle

ninty9er wrote:

I don't know where this idea came from, but I was at a Charlie McCreevy lecture lastnight (I know he's not minister for finance anymore), but someone asked if VRT should be abolished and he said any govt. would be stupid to do so, considering the amounts of money being spent on cars already. VRT isn't doing any harm. There are also too many cars on the road he said. Abolioshing VRT would further congest the roads.

While i don't agree with VRT I can still see where he's coming from

But why do you think VRT will be phased out

and this is the man supposed to be Commissioner for the Internal Market and Services.
Just read his homepage...
http://europa.eu.int/comm/commission_barroso/mccreevy/index_en.htm

One word - hypocrite!

Gurgle

ambro25 wrote:

Wouldn't surprise me one icky little bit if we ended up paying more for motoring around Ireland after they've scrapped the VRT

Depressingly likely.

More to the point - those of us driving 10 year old Toyotas will be paying more for the privilige while those driving 10 week old Mercedes will find their motoring bill going down.

Lord Nikon

What annoys me, is what VRT stands for. VRT=Vehicle Registration Tax
VRT should be the same for all vehicles, regardless of the engine size, Registration of a vehicle is the reg plates and logbook. Simple.


The Uk may have higher spec motors than Ireland, but they pay more in fuel costs than us.
Average price of unleaded in the UK is 88.9p(Stg), that the equivelent of 129.7c(EUR)
Average price of unleaded in Eire is 108.4c(EUR)
That's a staggering 21c(EUR) difference per litre on just unleaded. I'm sure the Uk government can afford to decrease VRT/Car tax/Vat, cosidering theirs well over 32million cars in the uk. They also have zero tolerance to insurance/car tax evading in the uk, too, some fine money to be made their.


Also, consider this in ireland.
I drive a 1.4 litre petrol car 4 seats, road tax = 292euro a year
My mate drives a 2.5turbo diesel jeep commercial, road tax = 253euro a year.
Bus/coach, 61 seats, road tax = 307euro a year.

Do I get penalised because I cause more polution, no
Do I get penalised because I put more weight on the roads and cause damage, no

The reason is, is because the government would make a lot more money by loading the private car owner, because their is so many.

I maybe going somewhat off topic, but you can see where I'm going. If the goverment abolish VRT they need to replace the money. My idea would be to load the tax of commercials, and bus services(not public transport). Driving should be a right, not a privelage.

Also, cars are cheaper in the states and mainland europe because they are left hand drive. Bigger demand for lefthand drive, more cars produced, more competition. Not a whole lot of production for righthand drive, compared to lefthand. it's cheaper for manufacturers to build just lefthand-drive, than both. higher prices than the US

Gurgle

neuromancer wrote:

Also, cars are cheaper in the states and mainland europe because they are left hand drive. Bigger demand for lefthand drive, more cars produced, more competition. Not a whole lot of production for righthand drive, compared to lefthand. it's cheaper for manufacturers to build just lefthand-drive, than both. higher prices than the US

Countries where they drive on the left include India (with 1 billion people) and Japan (127 million and an enormous car manufacturing industry)
Somewhere in the region of 1/3 of the world's population I think.

1. Anguilla
2. Antigua and Barbuda
3. Australia
4. Bahamas
5. Bangladesh
6. Barbados
7. Bermuda
8. Bhutan
9. Botswana
10. Brunei
11. Cayman Islands
12. Christmas Island (Australia)
13. Cook Islands
14. Cyprus
15. Dominica
16. East Timor
17. Falkland Islands
18. Fiji
19. Grenada
20. Guernsey (Channel Islands)
21. Guyana
22. Hong Kong
23. India
24. Indonesia
25. Ireland
26. Isle of Man
27. Jamaica
28. Japan
29. Jersey (Channel Islands)
30. Kenya
31. Kiribati
32. Cocos (Keeling) Islands (Australia)
33. Lesotho
34. Macau
35. Malawi
36. Malaysia
37. Maldives
38. Malta
39. Mauritius
40. Montserrat
41. Mozambique
42. Namibia
43. Nauru
44. Nepal
45. New Zealand
46. Niue
47. Norfolk Island (Australia)
48. Pakistan
49. Papua New Guinea
50. Pitcairn Islands (Britain)
51. Saint Helena
52. Saint Kitts and Nevis
53. Saint Lucia
54. Saint Vincent and the Grenadines
55. Seychelles
56. Singapore
57. Solomon Islands
58. South Africa
59. Sri Lanka
60 . Suriname
61 . Swaziland
62. Tanzania
63. Thailand
64. Tokelau (New Zealand)
65. Tonga
66. Trinidad and Tobago
67. Turks and Caicos Islands
68. Tuvalu
69. Uganda
70. United Kingdom
71. Virgin Islands (British)
72. Virgin Islands (US)
73. Zambia
74. Zimbabwe

Lord Nikon

Gurgle wrote:

Countries where they drive on the left include India (with 1 billion people) and Japan (127 million and an enormous car manufacturing industry)
Somewhere in the region of 1/3 of the world's population I think.

There are still only about eight million passenger vehicles on Indian roads, in a country of more than one billion people. That's a quarter the amount of cars in the UK.

Poor Indians rely, in addition to their feet, on an extraordinary array of contraptions for transport. They pile on top of buses in the Indian version of the double-decker. They ride tractors and bullock carts and pack 13 into Tempo taxis made for six.

I remember reading that Japan had very restrictive requirements on new car registration. Specifically, you had to show that you owned a parking space for a car before you could buy one, a rule that amounted to needing to already own a car before buying one.

the Japanese have a very strict system of auto inspection:

The first ones to talk to the government about this were the car manufacturers, and they convinced the government to enforce a rule that used cars have to go to the technical inspection after 3 years, and this is a costly matter since a check costs between 1500 and 3500 EUR. Once you're in the system, you have to get your car checked every 2 years, and once your car is 10 years old, you need to go there every year. This is a reson why the Japanese change cars quite fast, usually before the car is 3 years old. Important aspect is that you have no control whatsoever on the cost of possible repairs, because after the technical check, the car is driven to the garage and they do the repairs that the technical check asked them to do, you just get the bill with your car. A very nice rip-off

alias no.9

ambro25 wrote:

Christ on a bike! It's basic maths! :rolleyes:

I'm afraid VRT is nothing of the sort. If the government were in any way honest about how much they were charging in VRT, it would be one thing, but VRT is the ultimate scam, they don't charge it as a percentage of the pre VRT price as all other sales taxes are calculated, oh no, VRT is calculated on the final retail price or open market selling price (OMSP) of a car. If you were to calculate VRT as a markup tax on the pre-VRT price, the 22.5%, 25% and 30% rates will become 29%, 33.3% and 42.9% respectively. Who dreamt up this wonderful scheme where you tell the people you're taxing them 30% but take almost 43% (that's theft in my books)? None other than Bebebebertie.

It's not a case of double taxation, it's triple or quadruple taxation because of the way it is calculated, you effectively pay VRT on top of VRT, on top of VAT and if the car is made outside of the EU all of this is on top of Duty or Common Customs Tarrif (CCT).

alias no.9

neuromancer wrote:

Also, cars are cheaper in the states and mainland europe because they are left hand drive. Bigger demand for lefthand drive, more cars produced, more competition. Not a whole lot of production for righthand drive, compared to lefthand. it's cheaper for manufacturers to build just lefthand-drive, than both. higher prices than the US

As a mechanics of solids lecturer I once had used to say, "that's bollix that is". Pre-tax prices in Ireland are amongst the lowest pre-tax prices in the EU. EU legislation currently being enacted will ensure that the pre-tax prices for equivalent models will have to be identical across the EU. There may well be economies of scale in LHD v's RHD, but they do not dictate the price differential between Ireland and mainland europe / the US, taxes do.

ninty9er

VRT will have to be abolished but will obviously have to be replaced. consider a country like Sweden or Finland where they pay a top rate of 49% Income tax and a 1.0 bog standard Yaris is €18k

Gurgle

ninty9er wrote:

VRT will have to be abolished but will obviously have to be replaced. consider a country like Sweden or Finland where they pay a top rate of 49% Income tax and a 1.0 bog standard Yaris is €18k

Whats more relevant is not how much they're taxed, its where the money goes.

They have these long black shiny things all over Scandanavia, known as 'roads' in English.
We have 3 or 4 partial 'roads', the M1, M4, M7 and M50 spring to mind.

For the most part we have to get by with dirt tracks the Scandanavians wouldn't drive their tractors on.

ambro25

alias no.9 wrote:

(...)but VRT is the ultimate scam, they don't charge it as a percentage of the pre VRT price as all other sales taxes are calculated, oh no, VRT is calculated on the final retail price or open market selling price (OMSP) of a car.

I always thought OMSP values were actually reasonably spot-on (but biased by the fact they already include depreciated VRT of course), but I didn't know about final retail price.

So, essentially (I like things plain and simple )

(i) if dealer A sells me a new 2.0 car €10k, VRT = €3.3k (30%),

but if I'm dumb and don't shop around
(ii) dealer A sells me the very same new 2.0 car €20k, VRT = €6.6k (30%)?

F*ckin'ell :eek: :mad:

Seth Brundle

No ambro.
The VRT is decided by the revenue and has nothing to do with what you paid for the car.
using your simplistic example both cars would pay the same VRT (say ~3k) irrespective of the price of the car

edit - I see that you say 'new' then maybe yes the VRT would be based on the retail price - I don't think the revenue base the figures for new cars on a list price - maybe they do and the dealer has to pay a fixed sum

alias no.9

ambro25 wrote:

I always thought OMSP values were actually reasonably spot-on (but biased by the fact they already include depreciated VRT of course), but I didn't know about final retail price.

So, essentially (I like things plain and simple )

(i) if dealer A sells me a new 2.0 car €10k, VRT = €3.3k (30%),

but if I'm dumb and don't shop around
(ii) dealer A sells me the very same new 2.0 car €20k, VRT = €6.6k (30%)?

F*ckin'ell :eek: :mad:

No. The VRT will be the same regardless of the dealer, you can't get a discount on VRT. I should have said 'List Price' rather than final retail price, i.e. a car 2.0 costs €30k new, €9k (or 30%) of that €30k List Price is VRT, so the pre VRT price is €21k.

Now if you compare the cost of the VRT to the pre-VRT price, it represents a 42.9% mark-up on the pre-VRT price. If the government could even be honest about the amount they're taking, it would be one thing, but they tell you they're taking 30% but take a whopping 42.9%.

ambro25

@ kbannon - I was basing my example on alias no.9's post (VRT on 'final retail price', wherein final retail price = new)

@ alias - I understand, I think we got crossed somehow. In my example, I should have precised the €10k and €20k figures being list pre-VRT, so to re-phrase my (admittedly extreme) example in view of your last post:

Buy a new 2L car @ 13k from dealer A (10k list + 3k VRT)
Buy the same 2L car @ 26k from dealer B (20k list + 6k VRT)

Re-phrasing my earlier post according to the logic (edit in bold):

ambro25 wrote:

(i) if dealer A sells me a new 2.0 car €10k plus VRT = €3.3k (30% of 10k) = final price of €13.3k
but if I'm dumb and don't shop around
(ii) dealer A sells me the very same new 2.0 car €20k plus VRT = €6.6k (30% of 20k) = final price of €26.6k ?

wherein the 'list' (final retail price as I understand it) is cost landed from manufacturer + dealer margin (say 2k in case A and 12k in case ,

and whereby VRT varies (a lot in the example) for the same car because the final retail price (on which VRT is calculated, according to you) of the said car is different depending on the dealer.

Are we now in agreement?

alias no.9

ambro25 wrote:

@ kbannon - I was basing my example on alias no.9's post (VRT on 'final retail price', wherein final retail price = new)

@ alias - I understand, I think we got crossed somehow. In my example, I should have precised the €10k and €20k figures being list pre-VRT, so to re-phrase my (admittedly extreme) example in view of your last post:

Buy a new 2L car @ 13k from dealer A (10k list + 3k VRT)
Buy the same 2L car @ 26k from dealer B (20k list + 6k VRT)

Re-phrasing my earlier post according to the logic (edit in bold):


wherein the 'list' (final retail price as I understand it) is cost landed from manufacturer + dealer margin (say 2k in case A and 12k in case ,

and whereby VRT varies (a lot in the example) for the same car because the final retail price (on which VRT is calculated, according to you) of the said car is different depending on the dealer.

Are we now in agreement?

Still not quite there. The list price must be disclosed to the revenue by the manufacturer/distributor before a car can be sold on the irish market. VRT is based on this. Regardless of what discounts you may get from dealer to dealer, VRT doesn't change.

ambro25

They'd better find a VRT replacement soon, as they're going to need the €s by the look of things

This from the latest "Review of Ireland" (2nd March 2006) by the local Economical Mission that is part of the French Embassy:

Le programme d’extension de l’autoroute M50 devrait coûter 1,5 Mds €. Il consistera en un passage de 2 à 3 voies de la chaussée et en une automatisation du péage. Les automobilistes devront ainsi, pour circuler, acquérir une vignette à lecture électronique. Ce nouveau système permettrait au gouvernement de financer la rénovation de cette autoroute et de racheter éventuellement l’exploitation du West Link bridge actuellement détenue par la National Toll Roads.

Rough and ready (but accurate) translation:
* The M50 extension program should amount to €1,5bn.
* It will consist of morphing from 2 to 3 lanes and automating the toll.
* Drivers will be required to buy an electronically-readable tag in order to circulate.
* This new system is expected to let the GVT finance the renovation of this motorway and to eventually buy back the management of the West Link Bridge, currently held by NTR. (NDT edit: nice to see where/how our current road tax is being used, eh?!? :mad:)

linkie for the francophiles, download PDF and check p3

Now, I've worked with such "Missions Economiques" before (don't ask, I'd have to kill ya ), and their intel is usually first-rate and fact-based. So who knows? There ya go: no more VRT (or well, less of it) and a brand new taxation scheme that will require a fourth tag on yer windscreens: the EazyTaxPass™

Tipsy Mac

I think a new car boycott for 3 months or so would have a good effect, it certainly helped in the UK a couple of years ago when the manufacturers were ripping the consumers off.

If we as motorists were living in any other country in the world and had this unjust tax people would be on the streets protesting, seems nobody in this country it prepared to do anything. Nearest I have seen to anyone giving any time to the issue was a while back someone setup a anti vrt website but this is no more. I think if motorists got together and formed an organisation whereby all members put some kind of small anti vrt sticker on the back of their car to raise the issue with other motorists it would certainly be helpful.

Seth Brundle

Tipsy - Irish people are very poor at forming protests such as this. Just compare what the british did when fuel prices rose!
Irish people generally are happy enough to pay VRT, happy to pay motor tax, happy to pay the various fuel duties, happy to pay the various tolls, etc.
We have plenty of things to complain about but getting people together to complain as one will never happen!