Ireland facing EC proceedings over VRT charges

drunkmonkey

Page 5 Sunday business post..

It seems were being ripped off by our own Government(now there's a surprise) and the EU if finally about to take them to task on it, the court case has been going on since 1999......what in gods name has taken them so long??? A 10 year court case...

Page 6 brings more good news for Ireland, the European Commission is also about to whoop our ass over the price of smokes (that's for another thread)

ART6

The only result will be a raft of imaginative replacement taxes that will at least recover the loss to the government. In fact it will give them the opportunity to actually increase their take by slipping in a few additional ones and lump them all under the cloak of VRT replacement tax.

gpjordanf1

ART6 wrote: »

The only result will be a raft of imaginative replacement taxes that will at least recover the loss to the government. In fact it will give them the opportunity to actually increase their take by slipping in a few additional ones and lump them all under the cloak of VRT replacement tax.

I would imagine if there is a court ruling regarding the abolishment of a VRT tax then there would be appropriate clauses attached to ensure no further taxes could be implimented under different names.

Heres hoping anyway, its a sham tax that should be abolished immeadiately. And NO theres no justification in having it!

drunkmonkey

They can't do to much if there ruled against, were in the EU, any stealth or eco taxes prohibiting trade would be a direct contradiction of one of our 4 freedoms as EU citizens..
http://en.wikipedia.org/wiki/Four_Freedoms_(European_Union

Del2005

If Ireland looses this case and has to remove VRT all they'll do is call it a green reqistration tax and charge us more. And the EU will do sod all about it as it's cool to be green now.

The country is screwed for money and there's no way that they can afford to looose the VRT money, would you rather they put your income tax up? You can choose to buy a 2nd hand or low emmisson car to save on VRT but you can do nothing when they take it straight from your wages.

@ Drunkmonkey link isn't working. But they aren't interferring with any the 4 freedoms. You can still buy a car and import it they just charge you money to drive it on our roads. Nearly every other country does also, some just charge less tax and others more.

L1011

That the case is going forward doesn't mean its going to be won. We're not the only country in the EU with identically levied registration taxes and ours aren't even the highest.

drunkmonkey

Del they've already lost the money by screwing with VRT, the damage is done...
The EU has a problem with the revenue making up prices on cars. For example I bought a car for 7k in belfast, I brought it down here and the revenue put a Value of 16.5k on it and proceeded to charge me 36% of that, I paid close to 6k vrt on a car I bought for 7k. Now if that's not wholesale theft I don't know what is. I would have no quibble with paying 36% of the purchase price even thought that in it self is robbery.

ART6

gpjordanf1 wrote: »

I would imagine if there is a court ruling regarding the abolishment of a VRT tax then there would be appropriate clauses attached to ensure no further taxes could be implimented under different names.

Heres hoping anyway, its a sham tax that should be abolished immeadiately. And NO theres no justification in having it!

Dream on gpjordan. The EU couldn't impose such a restriction. The government could impose a b****y window tax or something instead, and there would be nothing the EU could do about it. What you can be sure of is that whatever they replace VRT with, it will cost everyone more.

gpjordanf1

ART6 wrote: »

Dream on gpjordan. The EU couldn't impose such a restriction. The government could impose a b****y window tax or something instead, and there would be nothing the EU could do about it. What you can be sure of is that whatever they replace VRT with, it will cost everyone more.

I certainly am a dreamer, but saying a ruling body cannot impose restrictions on any EU country isn't entirely true, they can do what they want. But under the current regieme I will not be buying any new cars in this country where a double tax applies, why should I, its a 'Free' country after all. I do know that the EU has been extensively lobbied over the years, I have contacted them myself on a number of occassions and they replied favourably saying they are monitoring the situatuion, but this was the first I heard of a court case, must pop out for the business post.

Pete4779

It will just see customs duty on petrol and motor tax going up much more.

mike65

People would complain less about a progressive tax on usage

drunkmonkey

ART6 wrote: »

The government could impose a b****y window tax

It was introduced during the 17th century by our English rulers at the time, that's why some building around the country have bricked up windows. If we regress to 17th century penal taxes we have truly come full circle. I'll be taking my Smith & Wesson and heading straight for Dail Eireann, enough is enough.

L1011

mike65 wrote: »

People would complain less about a progressive tax on usage

Isn't fuel duty a progressive tax on usage? It basically is road pricing, except with rewards for those that drive more efficient cars...

I'd be willing to pay quite a bit more on fuel if we went to the system used elsewhere where road tax and TP insurance are included in the price of fuel. Only problem is its usually done in countries with extremely tight borders (or no borders, like Australia) not one with a completely open land frontier...

whiterebel

France and Germany don't like anyone wiping the EU's eye on taxes, and we done so for years, by the quick change from Excise Duty to VRT. They have been whingeing on about our Corporation tax as well, because we managed to attract so much business with it. I don't like VRT but we are screwed if we let the EU decide our tax policies. If they find Excise Duty/VRT so hateful, how come they haven't gone after alcohol, mtaches, oil products, perfume etc?

If the EU win this we will be hit with a bigger, badder carbon tax which will make people wish for the good old days of VRT.........

ART6

gpjordanf1 wrote: »

I certainly am a dreamer, but saying a ruling body cannot impose restrictions on any EU country isn't entirely true, they can do what they want. But under the current regieme I will not be buying any new cars in this country where a double tax applies, why should I, its a 'Free' country after all. I do know that the EU has been extensively lobbied over the years, I have contacted them myself on a number of occassions and they replied favourably saying they are monitoring the situatuion, but this was the first I heard of a court case, must pop out for the business post.

I wasn't sneering at you gpjordan. It's just my economical use of emoticons. Actually I entirely agree with you, and fair dues to you for trying to do something rather than just gripe about it. Apologies if I gave the wrong impression:)

Del2005

drunkmonkey wrote: »

Del they've already lost the money by screwing with VRT, the damage is done...
The EU has a problem with the revenue making up prices on cars. For example I bought a car for 7k in belfast, I brought it down here and the revenue put a Value of 16.5k on it and proceeded to charge me 36% of that, I paid close to 6k vrt on a car I bought for 7k. Now if that's not wholesale theft I don't know what is. I would have no quibble with paying 36% of the purchase price even thought that in it self is robbery.

You know that you can appeal the VRT OMSP if you disagree with it and from reading post here you usually win. The EU has problems with a lot of things we do and aren't doing much about them either.

I've no sympathy for you on the price you paid for VRT. You must have researched the car you wanted to buy, the next step would be go to the revenue site and find out how much VRT will be. You then went ahead and bought the car knowing that the price for VRT was nearly the price you where paying for it. So you must have saved money somewhere.

If you didn't do this then you should have done more research as everyone knows you have to pay VRT when importing a car you've just bought.

gpjordanf1

ART6 wrote: »

I wasn't sneering at you gpjordan. It's just my economical use of emoticons. Actually I entirely agree with you, and fair dues to you for trying to do something rather than just gripe about it. Apologies if I gave the wrong impression:)

No worries ART didn't take it that way at all, just VRT gets my back up, seriously, annoys me!

JHMEG

That article is not about VRT. It's about the notional OMSP on 2nd hand imports being used instead of the actual cost of the car when it comes to calculating VRT.

-Chris-

Here's the article:

Ireland facing EC proceedings over VRT charges
Sunday, June 14, 2009
By Kieron Wood

The European Commission has begun proceedings against Ireland for infringing EU law by charging vehicle registration tax (VRT)o n vehicles imported from other EU member states.

The Revenue Commissioners charge VRT based on a notional ‘‘open market selling price’’ of imported vehicles, rather than the actual purchase price.

The open market price would typically be higher than the purchase price, resulting in higher VRT for the purchaser. VRT is charged at rates of up to 36 per cent, depending on a vehicle’s emissions.

Second-hand car dealers have long been critical of the method of calculating the VRT rate. In 1998, Niall O’Dowling of Used Car Importers of Ireland (UCII) brought High Court proceedings against the ‘‘secretive and arbitrary’’ way the tax was imposed. He claimed there was unfair discrimination in favour of the importers of new vehicles.




O’Dowling said that the distributors of new vehicles decided their open market selling prices, on which VRT was based. But the Revenue Commissioners calculated the open market price on second-hand vehicles, based on 25 unpublished ‘‘depreciation scales’’.

The Revenue claimed the open market price was the price a car might reasonably be expected to sell for on the retail market, and said it administered the VRT system ‘‘objectively and impartially’’. In 2005, it was ordered to provide all the relevant documents to UCII. At a hearing in 2006,Miss Justice Mary Laffoy said: ‘‘Unfortunately, the enthusiasm for a speedy resolution of the matter, which obviously inspired that order, seems to have dissipated.”

O’Dowling said last week: ‘‘We received a letter of confirmation from the EU Commission last week. The proceedings go back to a complaint registered in 1999. I would expect that the investigations are now at an advanced stage, given the time span involved.”

A spokeswoman for the Directorate General for Taxation and Customs Union in the European Commission confirmed that the Commission had opened proceedings, but added: ‘‘No public information is available at the moment.”

Total net receipts for VRT rose from €820 million in 2003 to a high of €1.4 billion in 2007. This year, VRT receipts have collapsed, with provisional figures of €240 million for the five months to May 31 - equivalent to an annual drop of almost 60 per cent.

drunkmonkey

Del2005 wrote: »

If you didn't do this then you should have done more research as everyone knows you have to pay VRT when importing a car you've just bought.

I did know it, that's why I have an appeal in against the omsp

halkar

If Cowen & co want to get rid of VRT, there couldn't be a better time to do so. With car sales down more than 50% they are hardly taking anything in with the VRT comparing the previous years. Of course we are making up for the loss with more taxes.

They did nothing for the motor trade. I would be in favour of bringing down the rate to 10% or less for new cars bought in Ireland, leave it as it is for UK imports and keep the jobs in motor trade.
Better to make 10% than nothing. Putting people in dole queues coming from motor trade already costing with social welfare and loss of taxes.

L1011

halkar wrote: »

They did nothing for the motor trade. I would be in favour of bringing down the rate to 10% or less for new cars bought in Ireland, leave it as it is for UK imports and keep the jobs in motor trade.

That would be against EU law though. Current system isn't as it applies to all...

Matt Simis

Usually big engined vehicles are less desirable sales wise, so the OMSP is generally far in excess of the real price.

However for certain older model, big engined or rare models the OMSP is actually way undervaluing the (UK) price, so its not all roses if they fixed the OMSP on the price paid.

Bee

Del2005 wrote: »

If Ireland looses this case and has to remove VRT all they'll do is call it a green reqistration tax and charge us more. And the EU will do sod all about it as it's cool to be green now.

The country is screwed for money and there's no way that they can afford to looose the VRT money, would you rather they put your income tax up? You can choose to buy a 2nd hand or low emmisson car to save on VRT but you can do nothing when they take it straight from your wages.

@ Drunkmonkey link isn't working. But they aren't interferring with any the 4 freedoms. You can still buy a car and import it they just charge you money to drive it on our roads. Nearly every other country does also, some just charge less tax and others more.

Good point,

But rememember the Green Slime party (responsible for loony taxation and the recent VRT screw up that has helped destroy the motor industry) got such a good kicking in the elections along with Fianna Failure that they will be wary of upsetting you and me with stealth taxes

I would suggest and hope that now people are aware of how powerful their vote is that they would remind their local councillors,T.D's and the other ne'er do wells, that any replacement taxes will have to be on corporations,rich business etc but not on the average tax payer if they hope to have any chance of political survival.

Guy:Incognito

JHMEG wrote: »

That article is not about VRT. It's about the notional OMSP on 2nd hand imports being used instead of the actual cost of the car when it comes to calculating VRT.

Who do you think you are comign in here and reading things properly before posting?

Your here long enough to know that certain buzzwords and acrynoms can only be replied to with rabble rousing.

-Chris-

halkar wrote: »

If Cowen & co want to get rid of VRT, there couldn't be a better time to do so.

Where did you get the impression that Cowen & co want rid of VRT?

-Chris-

Stekelly wrote: »

Who do you think you are comign in here and reading things properly before posting?

Your here long enough to know that certain buzzwords and acrynoms can only be replied to with rabble rousing.

LOL, genius!

Looks like we got ourselves a reader...

drunkmonkey

they need to do something to make some of the electorate happy, this constant **** kicking there giving consumers and business can't continue..

DanGerMus

Abolish VRT, Cut road tax and stick 20c on petrol and diesel.
Thats a true green tax as it penalises for every litre you use and not for having a car sitting in your yard.
I hypothesize that a small niche market for second cars could develop in time due to lower ownership costs. Wel thats the dream anyway.

Mailman

I have some familiarity with this case.

The issue is with the notional OMSP and more importantly the method of calculation which is based on depreciation scales of varying severity.
I have acknowledgement of depreciation scales and the Taxman moves cars from one scale to another depending on circumstances.
There is also an issue with how OMSP is calculated which is based on a first hand valuation of a similiar Irish registered car. A first hand valuation is Revenue looking in Carzone at asking prices(not selling prices) for cars on dealer forecourts(not at auction, not in private sale)
Hopefully if Niall O'Dowling is successful then a flat fee vehicle registration tax or registration tax based upon invoice price will replace the ad valorem system currently in place.
If it is flat fee then it can't be set too high as it would be regressive and punish those who run smaller cars more than large cars.
If it is based upon invoice price then anyone will be free to go overseas and purchase a car at a fraction of the price in the local market and still not have to pay too much tax.
Niall O'Dowling has succeeded in making the EU acknowledge that the valuation system is a joke and as the Irish Government has not complied with the directions of the Court I don't expect them to go easy on them.

Advice: If you are importing a car, appeal the VRT valuation. Amongst the reasons for appeal cite clearly that you have no faith in the Revenue Commissioner's ability to accurately value the car's OMSP. If things go well in this case and you've appealed your VRT valuation then you might if you are lucky be in line for a refund.

-Chris-

DanGerMus wrote: »

Abolish VRT, Cut road tax and stick 20c on petrol and diesel.
Thats a true green tax as it penalises for every litre you use and not for having a car sitting in your yard.
I hypothesize that a small niche market for second cars could develop in time due to lower ownership costs. Wel thats the dream anyway.

Man, we've been through this a million times.

Abolishing VRT would be catastrophic for used car values and would greatly impact both private punters and dealers alike.

Add to that the fact that the article the OP refers to isn't actually anything to do with the abolishment of VRT (do we need to mention this again?) and you'll find you're kinda OT...

Mailman

-Chris- wrote: »

Man, we've been through this a million times.

Abolishing VRT would be catastrophic for used car values and would greatly impact both private punters and dealers alike.

Add to that the fact that the article the OP refers to isn't actually anything to do with the abolishment of VRT (do we need to mention this again?) and you'll find you're kinda OT...

Abolishing VRT as currently implemented would be catastrophic for used car values and an absolute Godsend to the Consumer as the cost of trading up to a better/newer/more economic car would be reduced dramatically.

-Chris-

Trading up from what? Your devalued trade-in?

Mailman

exactly.

Mailman

Remember when DVD players used to cost 400 quid?

-Chris-

I don't understand

Mailman

Cars are a depreciating asset which need to be replaced regularly; the cheaper they are to replace the better.
A once-off hit on the value of your depreciating asset is good as you'll need to purchase maybe 10 more of them during your lifetime.
Keeping the price of a an item like this artificially high is lunacy from an economics POV.

Zonda999

I agree that something drastic needs to be done but it has o be done very carefully. If VRT was abolished, anyone whos bought a car in the last two years would take a huge hit. They already fecked up the changing of the rules on VRT last year and look how much harm that has done.

Mailman

Why does the price drop need to be controlled?
Will the car not start in the morning if the VRT is abolished? Does it suddenly become unroadworthy?
Who benefits from the controlled return to correct market value? The consumer or the dealer? The Dealers' industry body, SIMI, was complicit in the introduction of VRT and have benefited from a market with barriers to entry from other sellers within the same trading block for the last 17 years. They did a deal with Bertie who as Minister for Finance introduced VRT as an Ad Valorem tax.

-Chris-

Mailman wrote: »

Cars are a depreciating asset which need to be replaced regularly; the cheaper they are to replace the better.
A once-off hit on the value of your depreciating asset is good as you'll need to purchase maybe 10 more of them during your lifetime.
Keeping the price of a an item like this artificially high is lunacy from an economics POV.

That's fine as an economics exercise, but when you knock an average of €5k off the value of every car under 4 years old, but leave the owner paying the loan on the original value, that's going to hurt a lot of people.

Mailman

How exactly does it hurt them?
They already committed to their loan agreement so were paying the money anyhow.
if they absolutely hate the car they can trade for something else in the same price range or trade up and the same price drop will be seen on the car they want to change to too. they'll just have to pay the loan that they committed themselves to. Nobody twisted their arm to enter in to that loan agreement.

Mailman

That deal with the Bertie Devil is proving as restrictive for the Dealers now as it was for the customers in the past.
There are plenty of near new Touregs and Range Rover Sports that could easily find buyers in the UK but because so much VRT has been paid on them dealers can't afford to take the loss of the VRT amount (which isn't readily refundable) to sell them in to the UK market.
In fact the UK market is about the only outlet for these prestige cars now and dealers are having to swallow the loss just to clear the cars off their forecourts.

Mailman

The only identifiable consumer I can see who suffers a loss due to abolition of VRT are those who loose their license or give up their car and want to sell the car without replacing it.
Perhaps some sensible people might want to indulge in bangernomics and get rid of their expensive car but those people are few and far between.

-Chris-

Mailman wrote: »

Perhaps some sensible people might want to indulge in bangernomics and get rid of their expensive car but those people are few and far between.

You'd be surprised...

Mailman

You are talking to the owner of a 10 year old Rover 75. Gave up fancy cars years ago as they are more trouble than they are worth from an ownership POV.

-Chris-

So, as the owner of a car that would be entirely uneffected by any change in the VRT regime, you're saying that an abolition of VRT won't hurt anyone or cause anyone any stress?

That's like someone who doesn't currently own a house wondering why everyone who bought a house in the last 3 years is stressing over negative equity. :D

Mailman

How do you think I would be familiar with the VRT system unless I had intimate understanding of the VRT appeal process.
Just because I'm driving an old luxo-barge now doesn't mean I always drove one.

Big Nasty

Bar the negative equity, if VRT was dropped it would all be relevant to the consumer. I.e - your car is now worth X instead of Y and the cost to trade against a different vehicle would have reduced accordingly. However the Irish Motor Trade and related business' that employ thousands nationwide cannot afford to have their stock depreciate by 40%+ overnight. Hell, they can barely afford to operate as is!

-Chris-

I appreciate your knowledge and assistance, it's great when people come on posting proper information rather than spouting unfounded opinion. Thank you.

On the other hand, if the only vehicle you currently run is a car that's already suffered most of its depreciation, then it's easy for you to be dispassionate about the effect of a MASSIVE reduction in used car values.

Abolishing VRT would be a blunt, and extremely problematic way of dealing with issues like this.

The first step would be to change the way VRT is assessed on imported used cars, as per the original newspaper article. The second step is the ability to refund VRT for vehicles that are imported.
After that, start playing with VRT rates etc.

Mailman

I have explained dispassionately above why there is absolutely no need to stall the abolition of VRT. If people feel like have been done out of a few thousand euros then let the blame lie where it deserves to lay which is with the current administration or do you want to get them off scot-free for raping the motorist for the last 17 years.

-Chris-

Why not abolish PAYE income tax too? By the same token, the working Joe has been "raped" by the government too!

In fact, abolish all taxes!

Now what happens?