What next for VRT? - (Double taxation?)

Tipsy Mac

digitally-yours wrote:

Also explained in simple words here

with great detail


Taxing times for motorists

A simple question deserves a simple answer, right? Well, here’s a question for you: Why are cars so damn expensive here?

It’s not actually a tax on the cars, which would technically be illegal by EU law, but a tax on making the car legal to drive on Irish roads. This tax is known as Vehicle Registration Tax (VRT) and is payable on the first registration of a car in the State, which has to be done before it can be licensed for road tax purposes, thereby making the car legal to drive. You could buy a car and not pay this tax - but you couldn’t drive it or sell it on here, which more or less renders it useless.

http://www.motornet.ie/content/templates/template_tax.asp?articleid=2963&zoneid=68

This is another problem with VRT, how come someone who has owned a car for 6 months in UK or other EU country is exempt from paying VRT when they import a car into Ireland if the tax is a tax on the registration of the vehicle and not a tax on the vehicle:mad:

Tipsy Mac

sesswhat wrote:

So what happened then?
Has anyone ever taken a test case in this country?

Answer is no, SIMI could but then that would be shooting themselves in the foot as VRT suits them as it limits imported cars onto the market and helps fix prices.

sesswhat

stevec wrote:

Apparently they're going to increase road tax to compensate for the loss of VRT - and base the amount of tax on CO2 emissions.
It doesn't seem fair to anyone who currently owns a car and has already paid VRT.

Maybe they will give us back the VRT:D

Steve

After digging around on Dept of finance and CSO websites:

There are 1.8 million private cars on the road.

VRT revenue for 2006 was €1.3bn from 173,273 new cars and 54,244 used imports. ( = average VRT of €5714 per car)

After reading the above long post - and what it says is confirmed by SIMI's submission on VRT changes:

1. EU regulations will bring base prices of cars into line with the rest of europe - i.e. base prices will increase.

2. At the same time VRT will fall and be phased out so in effect the price to Joe Bloggs will remain pretty much the same. Only now the motor industry gets a bigger slice of the cake.

3. To compensate for the VRT loss, the boss men will increase road and / or fuel tax in the name of carbon emissions and the entire process is being claimed as "revenue neutral"

Where does that leave us?
We'll still end up paying the same price for a car, with the added benefit of a €1.3bn increase in road tax. That averages €722 extra per private motorist per year.

We're screwed:(
Someone please tell me I've got this wrong

Steve

Tipsy Mac wrote:

Answer is no, SIMI could but then that would be shooting themselves in the foot as VRT suits them as it limits imported cars onto the market and helps fix prices.

Seems it's the opposite, SIMI are agreeing with the change as it means more money for them... proof here:
http://www.finance.gov.ie/documents/publications/vrt/vrtsimi.pdf
They also want extra "green" tax on used imports .

spockety

If you're right, it means that people who have already paid VRT are going to subsidise all new/used car registrations going forward. GRRRRRRRRRR.

stevec wrote:

After digging around on Dept of finance and CSO websites:

There are 1.8 million private cars on the road.

VRT revenue for 2006 was €1.3bn from 173,273 new cars and 54,244 used imports. ( = average VRT of €5714 per car)

After reading the above long post - and what it says is confirmed by SIMI's submission on VRT changes:

1. EU regulations will bring base prices of cars into line with the rest of europe - i.e. base prices will increase.

2. At the same time VRT will fall and be phased out so in effect the price to Joe Bloggs will remain pretty much the same. Only now the motor industry gets a bigger slice of the cake.

3. To compensate for the VRT loss, the boss men will increase road and / or fuel tax in the name of carbon emissions and the entire process is being claimed as "revenue neutral"

Where does that leave us?
We'll still end up paying the same price for a car, with the added benefit of a €1.3bn increase in road tax. That averages €722 extra per private motorist per year.

We're screwed:(
Someone please tell me I've got this wrong

ambro25

stevec wrote:

After reading the above long post - and what it says is confirmed by SIMI's submission on VRT changes:

1. EU regulations will bring base prices of cars into line with the rest of europe - i.e. base prices will increase.

Not necesssarily so much for IE as for other countries (e.g. FR, IT). I'd expect IE price to move less, but cars to become better specced (so disproportionate improvement in price/product), as manufacturers have less to subsidise here than in other countries in which prices will play more catch-up.

2. At the same time VRT will fall and be phased out so in effect the price to Joe Bloggs will remain pretty much the same. Only now the motor industry gets a bigger slice of the cake.

Again, see above - not so sure.

3. To compensate for the VRT loss, the boss men will increase road and / or fuel tax in the name of carbon emissions and the entire process is being claimed as "revenue neutral"

Where does that leave us?
We'll still end up paying the same price for a car, with the added benefit of a €1.3bn increase in road tax. That averages €722 extra per private motorist per year.

Someone please tell me I've got this wrong

You haven't got it wrong generally, but you're missing the much bigger advantage (and correspondingly much bigger threat to SIMI) that removal of VRT entails: free import from the very much larger/better/cheaper UK second-hand market (and others for those not afraid to LHD).

It goes pretty much along the same lines of the credit card debt juggling: €10k in one lump scares, but lots of €500 here and there from time to time don't. What I mean is that someone who was thinking of importing a 2003 A4 TD with few bells and a big VRT bill to expect, may go up tp a 2006 A4 TD with all the trimmings, because it's not 9k in VRT out of the ferry, but €700 yearly. In that context, think of VRT/replacement for same as 'VRT on credit terms'.

spockety

It goes pretty much along the same lines of the credit card debt juggling: €10k in one lump scares, but lots of €500 here and there from time to time don't. What I mean is that someone who was thinking of importing a 2003 A4 TD with few bells and a big VRT bill to expect, may go up tp a 2006 A4 TD with all the trimmings, because it's not 9k in VRT out of the ferry, but €700 yearly. In that context, think of VRT/replacement for same as 'VRT on credit terms'.

Unless cars already registered and VRT paid are exempt, it'll be a very unfair tax.

Steve

Even SIMI admits that we've one of the lowest base prices in EU because we've one of the highest VRT rates.

ambro25 wrote:

Not necesssarily so much for IE as for other countries (e.g. FR, IT). I'd expect IE price to move less, but cars to become better specced (so disproportionate improvement in price/product), as manufacturers have less to subsidise here than in other countries in which prices will play more catch-up.

Agree on the better specs, however as pointed out above the base price of a Laguna is €4k cheaper here than the UK for the same car.
Why? They don't have VRT.
Same applies to France, Germany and the other non VRT countries. The price won't change in those countries and they'll still continue to pay the same road tax because there is no VRT loss to offset.

OK, the UK imports now become affordable - certainly a plus but we'll still pay the extra road tax on them.

As this is intra-EU legislation and only applies between member states, is it the death bell for cheap Jap imports? I assume they won't scrap the VRT on them?

ambro25

stevec wrote:

Same applies to France

No road tax or VRT there, btw - it's all in the fuel. But then again, the park in use is probbly an order of magnitude bigger. But then again, so's the country.

(...) because there is no VRT loss to offset.

I agree that VRT already paid is a problem, from both an equitable and economical POV.

The only way around that I can see, is a cut-off date for applicability. Which is pretty straightforward enough when you think about it: 3 main bands of "new" taxation for vehicles registered from date X, the same discounted bands of "new" taxation for vehicles registered before date X (= tax paid beforehand *as VRT* is taken into account)

gary the great

So if i dont basically if i bring a car back from the Uk i dont have to pay VRT, but pay these extra taxes each year?

ambro25

That's the hypothetical idea.

Example -

<VRT sysem>
2nd hand Irish Car X incl. VRT = 10k
2nd hand UK Car X excl. VRT = 7k, VRT payable 3k (hey! it is an example )
Pay 3k for imported UK car at time t0 (same day you get off the ferry)
Same road tax for both cars after VRT

<scrap VRT at time t1, replace with tiered road tax>
2nd hand Irish Car X incl. VRT = 10k, IE-registered before t1 so road tax per year €500
2nd hand UK Car X excl. VRT = 7k, IE-registered after t1 so road tax per year €750

Eventually, no cars left registered before t1 (save as to classics), and everybody's on "road tax per year €750", VRT-reprieved have subsidised depreciation of earlier VRT payers by paying higher tax = no losers.

Admittedly, it is a simplistic example - but you get the gist (some shiny-ass at GVT HQ can do the actual maths, I'm not paid for it )

Capt'n Midnight

Stephen wrote:

NewApproach: VRT goes totally against the principle of free movement of people and goods within the EU. Theoretically we could buy a new car from any EU state but the government has placed a barrier on this in the form of VRT.

Sorry that doesn't work

You can import a car from any EU country and pay their VAT rate instead of ours.

In order to then drive that car in Ireland you have to pay VRT,
applies to foreign nationals bringing cars here permenantly too.

They thought long and hard and copied the system that Denmark had gotten away with it.

Would be nice if they phased it out over a few years at 10% a year, actually the way new cars loose value they might even do more.

Carbon tax ?
Fairest way would be to increase the price of fuel. You use more, you pay more. We are on an island.

Steve

Thanks ambro25, that makes a lot of sense. [/heart attack]

ambro25 wrote:

<scrap VRT at time t1, replace with tiered road tax>
2nd hand Irish Car X incl. VRT = 10k, IE-registered before t1 so road tax per year €500
2nd hand UK Car X excl. VRT = 7k, IE-registered after t1 so road tax per year €750

So can we expect that in the future, if the price parity thing comes into effect, for the following to happen:
(anyone know is this an EU regulation or just a "suggestion")

New car bought in IE >2008
= €10,000 + €2,100 VAT = €12,100, €750 tax/yr

Same new car imp. from UK >2008
= €10,000 + €1,700 VAT = €11,700, €750 tax/yr

Doesn't make sense from either the IE revenue or motor trade POV.
They can't charge an importing consumer VAT, this is covered in legislation.
They can't load the import with tax so that the domestic equivalent is favoured - also covered in Treaty of Rome.

Still confused