[Article] Motorists want VRT phased out

Victor

http://www.sbpost.ie/web/DocumentView/did-781627819-pageUrl--2FThe-Newspaper-2FSundays-Paper-2FNews.asp

Motorists want VRT phased out
12/09/04 00:00

Irish motorists want vehicle registration tax (VRT) phased out, according to an EU survey, writes Louise McBride.

The poll on the European Commission website is seeking the opinions of motorists across Europe.

VRT is paid when registering vehicles for the first time. VRT on Irish cars ranges from 22.5 to 30 per cent of the expected retail price, depending on engine size. Cyril McHugh, chief executive of the Society of the Irish Motor Industry (SIMI), said the phasing out approach was realistically the only way to eliminate VRT.

``The Irish government has doggedly held on to a car purchase tax, even though excise duty on cars was abolished as far back as 1992,'' he said. ``It is clear that, without action at European level, we will be subject to the penal tax indefinitely.''

In its pre-budget submission for 2005, the SIMI is calling for an initial 2 per cent reduction in VRT. The society also wants a refund of tax for cars which are permanently exported.

The SIMI is collating the opinions of Irish motorists to pass on to the Commission.

seamus

Irish people don't want to pay a tax? Oh my God!



VRT is a ridiculous charge, but a poll indicating that people don't want to pay tax doesn't indicate anything at all.

Hagar

I believe VRT is purely grossly unfair, however it will have to be phased out over a period or the value of every car in the country will go through the floor. If new cars become 30% cheaper who will buy secondhand cars valued at the current tax rate ?

dmeehan

I'd imagine with "everyone" buyuing cheaper new cars, the market for second hand cars would be flooded and consequently, the price of a second hand car would also drop

ChipZilla

Yeah, it would be nice if VRT was phased out, specially as there are so many othr ways of screwing the motorist out of money. But I can't see it happening any time soon...

vector

ChipZilla wrote:

Yeah, it would be nice if VRT was phased out, specially as there are so many othr ways of screwing the motorist out of money. But I can't see it happening any time soon...

Well motor tax calculation could move from engine size to CO2 emmissions, this of course would appear to be a "green" move and naturally the end price to the motorist would increase, killing two birds with the one stone.

ChipZilla

Just like the system in the UK for cars registered after 2001. There are five tax bands each for petrol, diesel, and alternative fuel cars, ranging from £60 a year to £160 a year for the heaviest emissions. I don't have a problem with that, in fact I like the idea...

What I do have a problem with is ridiculous VRT rates for importing cars from elsewhere in the EU, extortionate road tax which is obviously not getting spent on any of the roads I drive on, and insurance premiums which make me cry when a renewal notice plops through the letterbox. Even the €25 to renew a driving license for ten years is there to milk the punters of their hard-earned. Did I miss any other screw-jobs? Probably.

But we digress off-topic...

vector

The driver theory test cost is EUR 34, the company that got that tender is sorted, captive market, guaranteed returns and all the other cliches certaibnly apply. EUR 34 is not a fortune but its too high, 25 or maybe 20 would be more like it.

Same with NCT, we all know that while annoying it does have value, but it should be 35, and same with the retest, which is the real money spinner, one failure (bar visual) and another 27.

All these things are overpriced by about 10.

BrianD

Do we really want the VRT phased out? A substantial amount of Government revenue is levied from this source. If VRT goes, tax on other items will have to increase to make up the shortfall. Furthmore, the manufacturers price of the car before VRT is artificially low when compared with other countries. With VRT removed the base price would rise to equalise with other markets.

The bottom line is cars will become cheaper but not subsantially cheaper and taxes on just about everything else will increase. A no win situation for everyone.

ChipZilla

BrianD wrote:

Furthmore, the manufacturers price of the car before VRT is artificially low when compared with other countries. With VRT removed the base price would rise to equalise with other markets.

Have you got any numbers to qualify that statement on artificially low prices? I have noticed that a lot of new cars in Ireland are 'Poverty spec' compared to their mainland europe equivalent, eg a 1.6l Renault Laguna - a big-ish car with an engine that is woefully underpowered - (under)designed to a price point for a specific market. Smallest Laguna in the UK or France is a 1.8.

The prices may appear low, but you're getting an inferior product... Anyway, I'd love to see some numbers on Irish car prices versus French/German/Dutch/etc prices.

BrianD

The srtificially low prices set by manufacturers are well known. If they charged the prices that they get in other markets, we would never be able to afford a car once the VRT was added on!

These lower trade prices were causing quite a problem with dealers in the UK. If the car is exported to the UK, VRT is not charged to the UK buyer. This means the base price of the car is substantially lower than that in the UK. The trade in new cars accross the border to N. Ireland and into the UK used to be quite brisk and accounts for more vehicles than you would think. As we are in the EU, a dealer can not refuse to sell to a buyer in another EU country (unless there is an issue with their ability to pay).

ChipZilla

BrianD wrote:

If they charged the prices that they get in other markets, we would never be able to afford a car once the VRT was added on!

Exactly my problem. VRT is a screw-job. No other european country as far as I know charges a VRT on a new or imported car. Holland has a VAT rate of 40% on new cars, but that's as bad as it gets - obviously if you're buying a car there to export you won't have to pay that.

As for dealers in the UK, customers buying cars on the internet or importing them have given them the kick in the arse they need. More competition is a good thing.

Tommy Vercetti

BrianD wrote:

Do we really want the VRT phased out? A substantial amount of Government revenue is levied from this source. If VRT goes, tax on other items will have to increase to make up the shortfall. Furthmore, the manufacturers price of the car before VRT is artificially low when compared with other countries. With VRT removed the base price would rise to equalise with other markets.

The bottom line is cars will become cheaper but not subsantially cheaper and taxes on just about everything else will increase. A no win situation for everyone.

I tend to agree with you there Brian. No govt. is simply going to write off this amount, so it will be made up elsewhere. I would much rather see the annual motor tax system reformed. It is absolutely ridiculous to charge someone over €1300 per year just because they have a bigger (and safer) car, whilst someone can bring a car in from another country and not contribute anything.

cyclopath2001

Isn't VRT used to protect local car dealers from cheap imports? I think the tax is deliberately set to equalize prices.

If VRT were abolished what would replace it?

Road tolling like Central London?

secret_squirrel

Can we afford to abolish VRT? Given the conjestion on our roads currently how can anything that would increase the number of cars on the road be a good thing??

At best I would support a wider band of taxation so most of us could afford a dinky toy but the sale of guzzling monsters was even more restricted.

thejollyrodger

Personally I think they should keep the VRT and introduce another tax - maybe a congestion charge or something like that. We cant keep building motorways just to keep up with 1 person 1 car usage;)

sliabh

Tommy Vercetti wrote:

It is absolutely ridiculous to charge someone over €1300 per year just because they have a bigger (and safer) car, whilst someone can bring a car in from another country and not contribute anything.

The only people that can do this are those that can demonstrate that they owned the car abroad for more than 6 months. So the numbers are pretty small.

But the EU has their eye on this anyway. Under EU cross border trade regulations this is probably illegal (It's going through the courts at the moment). Because the country you are importing the car into is getting to double tax it. the EU view is that if the government where the car was bought taxed it then it can't be taxed again when you try to move it to a second coutnry. This a restrictive trade practice.

Dept of Fin is worried about this one as the loss of VRT will have to be made up some other way. Personally I would go for fuel tax. That way the tax is linked to road usage and the size of your engine.

dmeehan

sliabh wrote:

Personally I would go for fuel tax. That way the tax is linked to road usage and the size of your engine.

Do you own a car yourself?

BrianD

dmeehan wrote:

Do you own a car yourself?

I don't get the relevance of the question. However, must countries do put the levy on vehicle usage (road tax and tax on fuel) - the more you use the more you pay.

The unfortunate fact about the VRT is that the revenue gained goes into general government expenditure and other hefty taxes would be required to replace it.

sliabh

dmeehan wrote:

Do you own a car yourself?

I do. So?

ChipZilla

thejollyrodger wrote:

Personally I think they should keep the VRT and introduce another tax - maybe a congestion charge or something like that. We cant keep building motorways just to keep up with 1 person 1 car usage;)

You already pay VAT *and* VRT on a new car. And you want to pay more tax? VRT is a restrictive practice IMHO, and should get the boot. Taxing petrol more is just going to reverse the flow of petrol across the border. As I mentioned previously I would like to see road tax based on the amount of CO2 you put out - I do believe that's fair enough. As for congestion charging, that is definitely being considered according to the Sunday Times last month. The guy who came up with the idea for London, Derek Turner, is said to be working on plans for Dublin, Cardiff, Bristol, Edinburgh, Auckland, Sao Paolo and Copenhagen:

http://driving.timesonline.co.uk/article/0,,12389-1235589,00.html

Ditch the VRT and charge people depending on how much CO2 they produce, and how much congestion they cause. The government would make an absolute mint if they did bring in congestion charging. Fair enough don't you think?

LFCFan

Taxation on Cars should only be on usage. You buy a car and tax it at normal prices like the UK or Europe and then get taxed when you buy petrol/Diesel. It's sickening, the amount of Road Tax we pay. It should be like the UK where you pay road tax based on emissions. Eur1,300 to tax a car is beyond a joke. Also, VRT as bad as it is, wouldn't be as bad if it was added to the Pre VAT price. As it is, it's added to the Post VAT price so it's double taxation.

eg.

Current Situation

Pre VAT Price: Eur10,000
Post VAT Price: Eur12,100
Post VRT Price (at 30%): Eur15,730

The way it should be:

Pre VAT Price: Eur10,000
VAT: Eur2,100
VRT (30%): 3,000
New Car Price: Eur15,100

Difference = Eur630

sliabh

ChipZilla wrote:

Taxing petrol more is just going to reverse the flow of petrol across the border. As I mentioned previously I would like to see road tax based on the amount of CO2 you put out - I do believe that's fair enough.

As petrol prices in the north are about 40% higher there is plenty of scope for jacking up the Irish duty.

And taxing fuel is the perfect way to link taxation to production of CO2. The more petrol/diesel you burn the more CO2 you produce and the more tax you pay.

mike65

Originally Posted by BrianD
Furthmore, the manufacturers price of the car before VRT is artificially low when compared with other countries. With VRT removed the base price would rise to equalise with other markets.

ChipZilla wrote:

Have you got any numbers to qualify that statement on artificially low prices? I have noticed that a lot of new cars in Ireland are 'Poverty spec' compared to their mainland europe equivalent, eg a 1.6l Renault Laguna - a big-ish car with an engine that is woefully underpowered - (under)designed to a price point for a specific market. Smallest Laguna in the UK or France is a 1.8.

The prices may appear low, but you're getting an inferior product... Anyway, I'd love to see some numbers on Irish car prices versus French/German/Dutch/etc prices.

Here's the proof from motornet.ie

Other carmakers, though, are taking advantage of the lower tax rate in the UK. The Fiat Stilo 1.2 Active, for example, which retails at £10,800 in the UK (the equivalent of €17,170) costs £9,230 or €14,677 pre-tax over there. The same car retails at €17,600 here, which mean Fiat are only asking for €11,875 for it in Ireland, a difference of almost €3,000. Or, put another way, their profit is far lower on Irish cars.

It’s not to single Fiat out, mind, because all manufacturers will naturally want to make as much as possible from every car they sell. In the UK, a basic Renault Laguna costs ST£14,255, which is the equivalent of €22,500. The pre-tax UK price is, therefore, around €19,200 in our money. The equivalent model retails at €23,250 in Ireland, which is remarkably close to the UK’s price, but to achieve this low price in Ireland, Renault have to accept a pre-tax price of €15,245 and will therefore have to try to save some of that money by paring back equipment levels, warranty and roadside cover.

So both of you are right we often do suffer lower spec but car manufacturers do sell into Ireland at a lower rate.

Mike.

ps here's the VRT/VAT list for all the EU states
http://www.simi.ie/admin/files/ACEATaxGuide2003Extract1.pdf

ChipZilla

The average retail price for a litre of petrol in the South is 99.5c (Let's just round that up to €1.00):

http://www.aaroadwatch.ie/petrolprices/

The average retail price in the North is 82.27p (€1.20 ):

http://www.aapetrolbusters.com/

Now that's a 20% difference to me. And anyway, just because petrol prices are higher up there doesn't mean the government here should be aiming for a similar price...

sliabh

ChipZilla wrote:

Now that's a 20% difference to me. And anyway, just because petrol prices are higher up there doesn't mean the government here should be aiming for a similar price...

No, but in the context of replacing VRT there is scope to add duty to fuel as an alternative.

Capt'n Midnight

vector wrote:

The driver theory test cost is EUR 34, the company that got that tender is sorted, captive market, guaranteed returns and all the other cliches certaibnly apply. EUR 34 is not a fortune but its too high, 25 or maybe 20 would be more like it.

Same with NCT, we all know that while annoying it does have value, but it should be 35, and same with the retest, which is the real money spinner, one failure (bar visual) and another 27.

All these things are overpriced by about 10.

Are you sure ?
Cos there is NO WAY you can have a multiple choice costing more than the practical road test, which by the way also includes a small theory test..

NCT - it's free if you don't have to use a lane , other wise they would have to book in instead of someone who would pay more. - also I'd feel safer passing an NCT (even though it has some omissions) than having a garage do a €30 inspection on the car,

mackerski

Tommy Vercetti wrote:

It is absolutely ridiculous to charge someone over €1300 per year just because they have a bigger (and safer) car..., whilst someone can bring a car in from another country and not contribute anything.

Amen to that - and let's add "cleaner" and "more economical". My current car has a 2.5 litre engine and costs something like €1800 a year in car tax. However, some of my earlier cars had tiny engines, smokey exhausts, guzzled petrol and would take a lot longer to bring to a halt. Many cars of this nature are still on the road - the state rewards their owners and penalises me.

Tommy Vercetti wrote:

...whilst someone can bring a car in from another country and not contribute anything.

That's not entirely true. People "can" do that, but they "may" not. Not for longer than a year anyway, which is the length of time you get to decide if you are staying. If you are, you are legally obliged to replate the car. Luckily for you, if you brought it from another EU country, you will, in most cases, not be liable for VRT.

Dermot

vector

Capt'n Midnight wrote:

Are you sure ?
Cos there is NO WAY you can have a multiple choice costing more than the practical road test, which by the way also includes a small theory test..

NCT - it's free if you don't have to use a lane , other wise they would have to book in instead of someone who would pay more. - also I'd feel safer passing an NCT (even though it has some omissions) than having a garage do a €30 inspection on the car,

The Driver Theory Test costs EUR 34
http://www.dtts.ie/faq2.htm#5

The Driving Test costs EUR 38
http://www.oasis.gov.ie/transport/motoring/driving_test.html#id3120668
(That is for a car licence Class B, higher Classes are more expensive to reflect the increased energy used by the tester to climb into a higher cab )

sliabh

vector wrote:

The Driver Theory Test costs EUR 34

The Driving Test costs EUR 38

And it's still cheap at the price. Some German collegues were telling me how its mandatory to attend driving school before you do your test. That will set you back €1500.

But for the price you do get a better standard of driver.

secret_squirrel

sliabh wrote:

But for the price you do get a better standard of driver.

Something we need pretty damn badly. Whilst we're drifting off the tax subject they should abolish the crazy provisional license rules here..

Infact this thread illustrates that the Govts whole approach to motoring needs a major rethink.