Cost/benefit analysis of the car scrappage scheme?

micro_dot

What is the benefit of the car scrappage scheme, and what is the cost, in terms of hard Euros?
To my mind, the scheme originates from Bill Cullen lambasting the government on the Late Late Show.

Browney7

Yeah I've been wondering as to the benefits to the exchequer myself on this issue. I'm sure it really helps our burgeoning car manufacturing industry.

Just seems to me that you are letting people with money off paying tax that they were going to pay anyway but if it is bringing in more than it costs then I will gladly change my views.

PhatPiggins

Don't have any of the exchequer figures but the Peter Bacon report on the car industry is worth reading in terms of the industry's importance to the economy. Granted it was commissioned by SIMI members so it has an obvious bias.

http://www.boards.ie/vbulletin/showthread.php?t=2055743863

Couldn't find a link for the full version.

thebman

A car scrappage scheme does increase sales though of people that were teasing with the idea.

Given that incentive IMO is probably enough to ensure we don't lose more people from the industry but also that we don't lose much tax take from it either.

So its not a big a lose lose as engaging in propping up the construction industry as many of those people aren't really skilled to work on infrastructure projects which would also require a high investment from the state to try to subsidise too where as car scrappage tax has arguable not much effect on tax take and props up the industry for the moment.

--edit
Personally I wouldn't have bothered though, if there was no demand let it die, it will come back up in time anyway. Propping up industries just delays a collapse in demand, it cannot prevent it IMO.

ardmacha

Because of the level of VRT here, the Irish scheme is different from those in other countries as it is merely a reduction in the tax payable rather than a net government payment. The hope is that cars will be sold which would not otherwise be sold so that the tax foregone is not a real loss. It also balances up the car market as having too few sales in one year would lead to an unbalanced stock of vehicles.

Joe 90

I would say that as a scrapage scheme will in most cases juts bring forward purchases that would have been made in any case it simply means that the garages and importers get their money a bit sooner and the state gets slightly less tax a bit sooner. I suppose that the garages may be able to get a bit more profit out of the purchaser as well.

bamboozle

car sales increase govt tax receipts, sustain jobs in motor industry, newer cars omit less CO2 and are cleaner in the environment.

getting old polluting cars off the road can only be a good thing from a safety and environmental perspective.

thebman

Joe 90 wrote: »

I would say that as a scrapage scheme will in most cases juts bring forward purchases that would have been made in any case it simply means that the garages and importers get their money a bit sooner and the state gets slightly less tax a bit sooner. I suppose that the garages may be able to get a bit more profit out of the purchaser as well.

Well it might bring those purchases forward but people generally change cars every 5 years or so (bouncing either side of this depending on economic conditions) so if someone bought a car after 4 instead of 5 years, they would still be pretty much inline to buy their next car in another 5 years or so.

bamboozle wrote: »

car sales increase govt tax receipts, sustain jobs in motor industry, newer cars omit less CO2 and are cleaner in the environment.

getting old polluting cars off the road can only be a good thing from a safety and environmental perspective.

It causes more pollution to create and sell a new car than it does to run an old polluter into the ground. This has been shown before.

However, the cars aren't manufactuered here and just get shipped and sold so it does come off our carbon levels as a nation which makes us appear greener.

Anyone see a flaw with the whole carbon tax between countries system using the above?