Seanad Éireann - Volume 167 - 26 June, 2001
Motor Vehicles (Duties and Licences) Bill, 2001: Second Stage.
Question proposed: “That the Bill be now read a Second Time.”
Mr. D. Wallace Mr. D. Wallace
Minister of State at the Department of the Environment and Local Government (Mr. D. Wallace): The origins of this Bill were established with the passing in the Dáil on 8 March last of a financial resolution which essentially amended the Finance (Excise Duties) (Vehicles) Act, 1952,  and the Finance (No. 2) Act, 1992, in relation to rates of motor taxation and trade plate licences. The resolution has, however, only limited statutory effect and needs to be replaced by a Bill which provides a permanent legal base.
The primary purpose of the Bill gives effect to the increase in motor taxation of between 4% and 6% for private cars and 6% on goods vehicles with effect from 1 April 2001. It provides for a reduced rate of motor taxation for vehicles kept exclusively on an offshore island. Furthermore, it expands on the categories of vehicles to be exempt from payment of motor tax in that it includes in this exemption the category of vehicles which are used exclusively for mountain and cave rescue purposes as well as vehicles which are used exclusively for underwater search and recovery purposes. Finally, the Bill provides the euro rate of motor tax arising from the introduction of euro currency from 1 January 2002.
To an extent, the rebalancing of the motor tax rates will “green” motor tax. While motor tax cannot be regarded, in itself, as a green tax, we can nevertheless configure the motor tax code to give it a greener slant, which will hopefully have positive environmental effects. On this premise, lesser increases in motor tax are applying to cars with smaller capacity engines which, as a general rule, do not use as much fuel as larger cars and, accordingly, create less harmful environmental side effects, particularly in relation to lower carbon dioxide emissions.
By way of information, the moneys collected by the motor tax offices of the local authorities are paid directly by them into the local government fund which was established under the Local Government Act, 1998. The motor tax proceeds in the fund are supplemented by an Exchequer contribution, which is increased each year at least in line with inflation. For example, this year the fund will amount to about £720 million, of which £319 million will be contributed by the Exchequer and about £400 million will come from motor tax receipts. This amount is being used primarily to finance non-national road grants and general purpose block grants for local authorities.
The importance of this source of income to local authorities cannot be over-emphasised. It greatly assists them in not only upgrading the country's non-national road system but also in providing adequate funding for whatever day-to-day operations they consider necessary. If local authorities are to meet the ever increasing demands being placed upon them, then it is incumbent on all of us to ensure that they are adequately financed in their endeavours. This is the great benefit of the local government fund as its resources, through general purpose grants, can be directed by local authorities to cover the areas of local priority, including maintenance of housing, roads, water and sewerage, fire services, the natural environment, community development, etc. The list is endless.
 The motor tax rate changes, to which I referred earlier, came into force on 1 April 2001. In the rebalancing of the rates, it will be noted that, while there were increases in certain categories of vehicles, in other categories no increases have been applied, in one category a reduced rate is being introduced and two classes of vehicles have been added to the exempt status from payment of motor tax. I will outline these in more detail for the House.
The increases are as follows. First, a 4% increase for private cars up to 1,100cc which represents an annual rate increase of between £4 and £6. Second, a 5% increase for private cars from 1,101cc to 1,500cc which will result in annual increases of between £8 and £10 and, third, a 6% increase for private cars of 1,501cc and over, which will translate into annual increases ranging from £15 per annum at the lower end of this bracket to £51 for private cars over 3,001cc. These increases cannot be regarded as excessive, especially as almost two thirds of the current vehicle population is under 1,500cc and will, therefore, be subject to relatively low increases.
An across the board 6% increase is provided for goods vehicles. This, in effect, will in the majority of cases represent an approximate annual increase of £10, as over 80% of commercial vehicle owners pay the minimum rate. Motorcycle tax rates have been revised to reflect the different sizes of these vehicles. The single rate of £22 is being replaced by the three bands, which existed prior to 1992. The new rates range from £25 for motorcycles of 75cc and under, £35 for those at 76cc to 200cc and £45 for motorcycles of 201cc and over. In this regard, the maximum rate for the higher cylinder motorcycles of £45 compares very favourably with the £40 rate for the similar cc band which operated prior to 1992. The motor tax class of vehicles which are classified as machines, workshops and recovery vehicles has been brought into line with the goods vehicle rate, the minimum of which is £170.
The Bill provides for a 6% increase for agricultural tractors. The rate for non-agricultural or general tractors is being aligned with the minimum goods vehicle rate of £170 in view of the purpose to which such vehicles are being used. In addition, the Bill provides for average increases for trade licences or trade plates by which they are commonly known. These are green registration plates used by motor traders on vehicles, which are temporarily in their possession, in lieu of a tax disc on the vehicle.
There are some categories of vehicles where no increases were invoked. These include public service vehicles such as buses, taxis and hackneys and youth-community buses, school buses and electric vehicles. A reduced rate of tax, £52, is being introduced for vehicles which are kept and used exclusively on offshore islands not connected to the mainland. This reduction is in recognition of the limited use of such vehicles.
Motor tax is being abolished for vehicles used exclusively for mountain and cave rescue pur poses and for vehicles used exclusively for underwater search and recovery purposes. Both of these classes join the exempt category which include ambulances, fire brigade vehicles, civil defence and disabled vehicles, that is, full motor tax exemption is now being accorded to all vehicles used in emergencies.
While not specifically covered in the Bill, provision has been made in regulations which came into effect on 1 April 2001 to assist people who may face difficulty in taxing their cars on a full year basis. These regulations provide for a reduction in the surcharge which applies to vehicles which are taxed half-yearly or quarterly. The savings envisaged on a half-yearly disc equate to an annual saving of £2 up to the middle cc band rates, rising to £8 in the two highest bands. Savings in respect of a quarterly disc of £4 annually will arise for the two lowest bands, increasing to £8 in the highest bands.
Aside from the motor tax element, the Bill also empowers the Minister to vary the cost of full driving licences by regulation. Driving licence fees for provisional licences are already prescribed by regulation. The extension of this regulatory power to full licences will enable the undertaking of a review of the overall driving licence fee arrangements so as to introduce a more equitable licence fee arrangement for persons aged more than 70 years. Enacting legislation will be required to enable these arrangements to be implemented. This Bill is the vehicle for this change. As soon as it is enacted it is intended to proceed quickly with the necessary regulatory changes for the introduction of this more equitable system.
Under existing legislation, given that motor tax proceeds are paid into the local government fund for local authority use, costs incurred by the Department in connection with the collection of motor tax are recoupable from the fund. Aside from motor tax, fees from driver licences and other minor miscellaneous fees and duties are also paid into the fund for distribution to local authorities. Even though such fees are paid into the fund, the Local Government Act, 1998, does not specifically refer to the recoupment from the fund of the costs associated with the administration of these fees. As with the costs associated with the collection and administration of motor tax, it is considered that the same provisions should apply in respect of driver licences. Section 7 provides for this.
With the introduction of the euro notes and coins from 1 January 2002 the Bill provides the euro rates of motor tax. The euro amounts were arrived at by dividing by the euro converter, 0.787564, disregarding cents. This approach not alone ensures that motor tax offices continue their practice of handling whole units of currency but will also provide for a reduction in motor tax to all customers. Savings vary from under a euro for annual renewals to over one euro for half-year applications, and one to three euro for quarterly renewals.
 The Bill is the necessary legislative requirement to the Financial Resolution for motor tax changes which have been in place since last April. The motor tax increases are, by and large, minimal and below the level of inflation. The increases are more than balanced by the benefits which the additional income will generate. They will greatly assist in improving the capabilities of local authorities in providing an improved customer service to all its customers. In addition, they will also be a factor in our campaign in the improvement of our environment by encouraging the continued use of smaller capacity cars.
Mr. Manning Mr. Manning
Mr. Manning: I cannot find the same level of enthusiasm for this Bill as the Minister of State. It is modest legislation that does very little in practical terms other than increase further the costs borne by many motorists. When we speak of motorists we are not referring to an elite group, as may have been the case 30 or 40 years ago, but to virtually everybody. For most people motoring is no longer, if it ever was, an option or a luxury. Few people would willingly spend hours each week stuck in traffic jams or choked in slow moving traffic if they had an alternative, such as efficient, reliable public transport or, in many cases, any form of public transport. We are talking about what has become an essential staple in most people's lives. The Bill will do nothing for these people other than wave the finger at them and virtually accuse them of anti-social behaviour because of the necessity for them to use their cars to get to work.
The Bill continues the attack on motorists introduced in a sneaky way in the budget. The thinking behind it is similar to what we read by some of the elite journalists who live in commodious accommodation in the city centre and berate other people because unlike them they do not use bicycles to get to work, forgetting that others are living very long distances from work and the use of bicycles is not practicable. There is an element of preaching in the Bill which hitherto has been confined largely to these journalists.
The public is by and large patient and if it was seen that the Government was serious about improving public transport the Bill could be accepted more easily. However, while talking big about initiatives, the Government is refusing to take many of the smaller steps needed to improve public transport. We still await the licensing of sufficient private sector buses in the major cities. Vehicles that have been licensed have yet to receive flexibility regarding picking up passengers, set down stops etc. In addition, there is an insufficient provision by the Government of new buses particularly, but not exclusively, in Dublin.
Another point about the Bill that stuck in many people's throats when it was published was the hype the Minister, Deputy Dempsey, invested in it when he described it as major green legislation. I wish the Minister a full and speedy recovery from his debilitating illness. We would all like to see him back as soon as possible. However, it has  been the history of his tenure in office that all his ducks are portrayed as swans. Everything is hyped and every initiative is considered a major breakthrough. All the eggs are counted and cashed in before they are hatched. The Minister is now paying the price for over-hyping every activity in which he has been involved since he came to office. No other Minister has given such a depth of meaning to the term “U-turn” as he has done recently.
In that context, it was typical of him to describe the Bill as an environmentally friendly measure, but it is nothing of the sort. It does nothing to improve the environment and it is impossible to see any environmental purpose that will be served by the Bill or any environmental improvement that will result from it. The legislation is a raid on the local government fund. This fund should be ring-fenced by the Minister, but it has become a revenue earning measure for him for activities which have nothing to do with roads. A full discussion is urgently needed on how the local government fund is distributed, what happens to the motor taxation income that goes into it, how it is allocated among the various local authorities – there are significant disparities between different parts of the country – and how the roads system and the maintenance of roads in different parts of the country are treated.
Few people feel they get value for money from their motor fund contributions. This is particularly true of people living in the many areas where road repairs often lag years behind schedule and where the fabric of roads and footpaths leaves much to be desired. In many cases, they have become hazards. The basic purpose of the Bill is to extract payment from motorists to finance a range of public services which have nothing to do with motoring. The Minister, Deputy Dempsey, said this was the case in a disarming passage in his contribution to the other House. He stated:
Significant downstream costs will arise for authorities in terms of the operation and maintenance of projects and schemes under the national development plan. Additional resources which arise from changes in motor tax rates will help local authorities to meet their commitments in this regard and to provide more and better quality services to the community.
This is the imposition of a tax on the motorist to help fund changes which may be desirable but which have little to do with motoring. This is why the Bill is unsatisfactory.
The Bill was introduced in an unusual way. This may be history but it caused a great deal of annoyance at the time because it was not announced during the Budget Statement, but in a press release issued later on budget day when deadlines had passed and most of the newspapers had been put to bed. It was hoped to avoid the  usual scrutiny by sneaking in this Bill and catching the public unawares. However, that does not work. People can accept new charges and impositions if they are told about them upfront, but their introduction in that way caused great annoyance and it did not work.
I referred to the greening effect of the Bill but in the debate on motoring, not enough credit is given at times to the motoring industry and not enough pressure is placed on it to ensure every effort is made to make cars and other vehicles more environmentally friendly by adapting to the latest developments in technology. There has been a move in recent years towards cleaner petrol and more fuel efficient cars. A move away from the total dependence on petrol has begun and there have been improvements in emissions from cars. However, is the motoring industry itself sufficiently committed and willing to invest large sums of money in research and development and in pushing these changes even further?
There may be smaller cars, but there was madness in millennium year when people rushed to get top of the range 00 registration cars. There was an incredible element of competition among people who were benefiting from the Celtic tiger towards ostentatious consumption. People wanted to show off that they had benefited more than others from the Celtic tiger. There was a great sense of gaucherie and the nouveau riche about much of the behaviour last year. Perhaps people are changing and there is a move towards smaller cars and less ostentatious lifestyles, but I doubt it. It is difficult to ask motor manufacturers to develop smaller and more fuel efficient cars when so much of the emphasis is placed on top of the range models as a statement that one is doing well.
In terms of the place of motorists, it is interesting to note that last year motorists paid an aggregate amount of £3 billion to the Exchequer. This figure includes all taxes from fuel duties to VAT and VRT in addition to road tax. Of the £3 billion, only 16% was reinvested in roads, public transport and road safety. The rest is taxation and, in that context, it is difficult to understand the fiscal justification for the tax increases in the Bill.
Road safety initiatives are chronically underfunded and a measure suggested by the Automobile Association is worth considering. It proposed that revenue gained from the 1.5% stamp duty levied on motor insurance, which amounts to £20 million annually, should be ring-fenced for road safety. This levy was originally devised in the 1980s to prop up the old PMPA. That situation is gone but, unsurprisingly, the tax is still in place. We all remember other levies that were imposed in the past for a specific purpose but which lasted long after the original purpose ended. Whatever way it is tackled, there is an increasing awareness that not enough is being done in relation to road safety. The Department's initiatives are welcome as far as they go, but they do not go far enough. There is a need for a reallo cation of significant resources to road safety. It is not a good Bill, but the Minister made the best possible case for it.
Mr. Walsh Mr. Walsh
Mr. Walsh: The Minister of State, Deputy Dan Wallace, is a frequent visitor to the House and that is indicative of the many fine Bills that have emanated from the Department of the Environment and Local Government in recent years. Senator Manning described the Bill as a modest one but what else would one expect of a Bill whose function is merely to give a more permanent legislative base to the collection of motor taxation?
I could take a populist line and welcome the Minister but not the Bill, but I prefer to take a more realistic approach. I welcome the Bill, particularly certain sections which, while modest, are nonetheless significant. The grading of motor taxation, to which the Minister refers as a slight greening of the taxation system, is a good measure. The percentage level of increase – in monetary terms it is a little more significant – for vehicles of 1100cc encourages a trend towards smaller cars, given that two thirds of the cars on the road are under 1500cc. Cars with greater engine capacity consume more fuel and have an adverse environmental effect. From my experience in the transport industry, I know that, like many aspects of expenditure in that industry, fuel is imported and high fuel costs have an adverse impact on our balance of payments. Making a distinction between cars with smaller engine capacities and more powerful cars is a good measure.
I agree with Senator Manning that we have a dearth of public transport. This has been identified by successive Governments and the current Government not only recognises this fact but has taken steps to do something about it through the national development plan. Much of the expenditure envisaged during the course of the plan will be to rectify the previous dearth of investment in public transport. Anyone who experiences traffic congestion in our cities will see the need for increased investment in public transport.
The fact that the Minister decided not to apply a tax increase on taxis and buses is a good thing. Nevertheless, many buses have emission levels above what is acceptable for vehicles of their age. I hope a future Bill will include a measure to sanction vehicles whose emission levels are unacceptably high. Such a measure should be policed more effectively than is the case at present. There is an onus on owners of public service vehicles to ensure not only that their vehicles are safe, but that they do not spew toxic gases into the air. Penalties for exceeding acceptable emission levels might be an incentive to vehicle owners to maintain compliance with emission regulations.
Senator Manning referred to the expenditure of the motor taxation fund. I have been critical of the lack of funding for local government, particularly in the years when there were constraints on public finances. Local government was seen as an easy target for curtailing Government spending.  This lack of funding did not enhance the activities of local government. An independent funding system for local government is my preferred arrangement. The removal by different Governments of rates on residential property and of water charges did not help the concept of accountability in local government. If local authority members raise their own funding they will be accountable for the spending of that funding. This is the sine qua non of controlling public expenditure.
The local government fund, introduced by the Minister for the Environment and Local Government, Deputy Dempsey, is the first attempt for decades to address the issue of local government funding on a reasonable and equitable basis. Those of us who have spent many years attending council meetings will recognise the improvement in recent years of local authority funding. We should acknowledge that and I have complimented the Minister on this development on previous occasions.
It is easy to say the fund is used for a variety of purposes. Nevertheless, it must be recognised that there has been significant allocation for non-national roads in recent years. Because of the lack of investment, and perhaps because of the reduction in manpower for the maintenance of water courses and so on, the task is a challenging one. The availability of funding has assisted an improvement in recent years. Where good quality engineers who are committed to maintaining the road systems are in place, progress has been seen. Improvement is not uniform throughout the country but the problem is one of the availability of expertise as much as of funding.
The amount of money spent on non-national roads is small compared with the huge investment in the main national traffic arteries. Capital and maintenance expenditure on national primary and secondary roads is in excess of £1 billion per annum. The national development plan is the single biggest plan ever laid before either House of the Oireachtas. If its targets are to be met it will incur a cost of £46 billion between now and 2006. Much of that spending will be targeted at our infrastructural deficit, of which a principal area is our national primary and secondary routes. Much of the current debate about compensation for land acquired for road building is a consequence of the ambitious plans to improve the national road network.
Our road network needs huge investment in the short term. Modest tax increases of between 4% and 6% – at or below the level of inflation – are preferable to allowing levels to remain for a number of years and then substantially increasing them. Such a system brings consumer resistance. Most people in business review their charges based on their own cost increases in a particular year and try to maintain prices at reasonable levels. This gives a vibrancy to the economy because of the competitive pressures which exist.
 I have some sympathy with those who complain about our failure to benefit from membership of the European Union with regard to the price of motor cars. We are way ahead because of particular excise duties and also because the cost of a car here prior to taxes being levied is higher than in many other EU countries. As a consequence, the motorist is not getting as good a deal as he should, given our full participation in the EU. I know the counter argument is that with the huge increase in traffic and a failure to maintain a commensurate improvement in the road network, any such change should follow rather than precede road investment. I hope it will be achieved at some stage and I am sure people will continue to campaign for that.
This is a short Bill. The funding will assist county and regional roads. Increased funding is available to local government and the Local Government Bill will come to the House soon. It is imperative that councillors are given more say and more autonomy in the decision-making process. All these things must be intertwined if we are to inject dynamism into the system and have a more accountable and democratically-based system.
I welcome one provision in the Bill for a reduced rate of motor tax for people living on islands, at £52. It shows an empathy with a long-time policy of one of the Government parties, and possibly both of them, to ensure as much as possible that a presence is maintained on our islands. This measure recognises the difficulties involved in island life. Cars will have to be retained on the island to qualify and this is reflected in the reduced charge. It is a sensible measure and any Government policies that can be skewed towards encouraging people to maintain the island way of life should be considered. A recent programme strongly advocated the placement of industries on the islands to give an employment base.
Section 5 provides for the Minister to change fees for the full driving licence by regulation. That is an extension of the arrangement for provisional licences at present. Section 7 empowers the Minister to recoup his or her expenses associated with the issue of driving licences. I wonder whether we should put the adjective “reasonable” before “expenses” so that the fund only covers what is necessarily incurred. The introduction of the Schedule at the end of the Bill continues what was there previously and sets out clearly what the increases are. This is a modest but necessary Bill. It contains some good initiatives which reflect positive thinking within the Department and a common-sense approach in relation to certain aspects of the imposition of the taxation.
Dr. Henry Dr. Henry
Dr. Henry: I welcome the Minister and, like Senator Manning, I too wish the Minister for the Environment and Local Government a speedy recovery. He has had a rough time, as far as one  can see from the members of the Government parties, for implementing Government policy. In view of the fact that he has had a rough time from the Independents in the other House, as an Independent in this House I will try to be as friendly as possible in my remarks about the Bill.
This is a disappointing Bill. I had expected a great deal more from it. I was pleased when I read a reference to “invalids”. I have been asking for many years for an extension of the criteria for disabled drivers regarding tax and registration of vehicles. I regret there has been no change in the same old criteria which must have been put down decades ago. There are many young people who are most anxious to return to work following accidents or medical catastrophes, but they are not in a position to do so because of the cost of getting modified cars taxed and insured. It is a pity the opportunity was not taken to do something in that section.
I wish to address the section dealing with driving licences. Surely something could have been done about the difficulties encountered by many of my colleagues. A bizarre little booklet has been issued by the Department of the Environment and Local Government on the medical aspects of driver licensing as a guide for medical practitioners. The Minister might have heard a colleague of mine, Dr. Maurice Gueret, talking about this subject on “Morning Ireland” today. It has been mentioned to me by many other practitioners. The public transport system is very inadequate so the loss of a driving licence is catastrophic, particularly to those living in the country. When doctors feel that they should perhaps bring up with a patient the fact that the person is not up to driving, and I do not mean on the grounds of eyesight, the patient can be very offended. The booklet issued by the Department gives no help or guidance even though it was updated only three years ago. It must have been updated from some booklet that was issued when the model T Ford was produced. It really is an absolute disgrace.
A huge number of diseases are not mentioned. I suggest to the Department of the Environment and Local Government that it consider the website produced by its sister Department in the United Kingdom where Alzheimer's disease is given four pages of guidance for doctors. There are only two disqualifying diseases listed in the Department's booklet. One reference is to persons who are dependent on psychotropic drugs – they are to be totally disqualified. I ask if that includes people who are dependent on sleeping tablets. A very large number of the Irish population is dependent on sleeping tablets so they are obviously out, otherwise they are illegally holding driving licences. The next group consists of persons suffering from a serious cardiac arrhythmia which has resulted in loss of consciousness. Cardiac arrhythmia is very common and very well controlled by modern medical drugs. It does not say how long ago this serious loss of conscious ness should have taken place. Those are the only two disqualifying diseases mentioned.
The United Kingdom has a national driver and vehicle licensing authority. It produces the excellent website for the guidance of doctors and I suggest that the Department get their own one going. Some of the criteria in the booklet are bizarre. One section states that the medical examination should take account of severe mental disturbance, whether congenital or due to disease, trauma or neurosurgical operation on the central nervous system. Section B cites severe mental retardation. Section C mentions psychosis, which in particular has caused general paralysis. This is back to general paralysis of the insane when syphilis was a problem. Section D mentions severe behavioural problems due to dementia, psychoneurosis or personality defects or disorders.
We dealt with the Mental Health Bill in the House last week and some Senators may remember that we excluded from treatment in mental hospitals people with mental defects or disorders. The Mental Health Bill excludes them and here it says that, if necessary, certification for having a driving licence shall be for a limited period only. It does not specify how long that period should be or if one has to re-examine people with severe mental retardation to see if they should have a licence. That whole section is ridiculous. That section is in place for all licences, apart from people driving heavy duty trucks. If they can get through that they can drive motorbikes, with or without a sidecar, passenger cars carrying up to eight, passenger cars with a trailer, tractors and so forth.
The section on alcohol is interesting. We are repeatedly told how important alcohol is as a factor in road traffic accidents. I will certainly not disagree with that. In the United Kingdom a person with an alcohol problem cannot drive a public service vehicle until three years after they have been discharged from hospital or by a doctor. They cannot drive their personal car until one year after they have got over an alcohol problem. In Ireland, in the case of anyone applying for a licence and suffering or having suffered in the past from alcoholism, fitness to drive may be certified for limited periods only so as to ensure that the applicant remains under medical supervision. Does this mean that if they are driving the school bus the doctor should hop on and off every now and then to see how they are doing? Those regulations are absolutely bizarre.
I shall not labour the case but I will conclude with this thought. In respect of all general categories applying for a licence it states that in the case of an applicant of any category special attention shall be paid to serious diseases of the blood. I suggest a certain amount of upgrading with medical help is badly needed in that area. The section dealing with alcohol is ridiculous. There are advertisements on television about alcohol related accidents, yet the booklet given to registered general practitioners for guidance advises  one to keep an eye on them and to try to ensure they are not getting into trouble.
The Bill is disappointing because it could have looked at all these areas and availed of the opportunity to improve them.
Mr. Costello Mr. Costello
Mr. Costello: My contribution will be on the same lines as that of Senator Manning. While I welcome the Minister of State I am not over-enthused by the legislation. It is modest legislation but the problem is that it provides for another form of tax, a surreptitious tax, a tax by stealth. It is a tax that was not announced properly in the budget by the Minister for Finance. To try to pass it off as a green tax or as being desirable because it benefits local authorities is not good enough. The only thing green about it is the new green registration plates or discs that are being introduced. If he wanted to do something for the greening of the environment, the way to go about it was to put the funding and the energy into public transport which has been absent during the past four years.
We are into the fourth year of the Government and, unfortunately, public transport has been left devoid of the necessary resources. The rail system is terrible, the Luas is non-existent, the DART does not have enough carriages, Dublin city is congested and the taxi system was belatedly deregulated at Christmas but no regulations have been put in place to ensure an adequate provision over the 24 hour period during which services are required in a busy city such as Dublin. That is the way to go about greening the environment. This would get rid of the need for the rapid increase in motor vehicles. Given the poor condition of roads everywhere, the car driver is heavily penalised by excise duty, insurance costs, the licence fee and motor taxation which it is proposed to increase. Anyone using a motor vehicle is heavily taxed. Yet they have no choice because a public transport system that would alleviate the need for private transport is not being put in place. This is not a green measure.
What are the benefits for the local authority? It was not, as suggested by another speaker, this Government or a previous Fianna Fáil Government that did anything about funding local authorities. Rather it was the Labour Party and Fine Gael in the previous Administration when the then Minister for the Environment and Local Government, Deputy Howlin, ring-fenced the motor taxation fund for the purpose of providing at least some relatively independent funding for local government and getting the Exchequer to provide, not a matching amount which would have been worthwhile, but a supplement. Unfortunately, it is not a satisfactory way of funding local government. Local government needs its own funding mechanism. This has all stemmed from the abolition of domestic charges in 1977. The Minister of State will remember with whose Government that was associated.
Waste management charges are being introduced. It is ludicrous that in the past week or two  people, including those who do not have bins, have received notes from the local authority demanding the payment of bin charges. Virtually every area within the canals will continue to operate the old system, that is the black plastic bag service. Not only do they not have bin charges but they have no recycling facilities. Now they are being charged for a greening measure, an environmentally conscious and aware measure, but there is nothing new in it. They are being charged £65 for the collection of bags – called a bin charge although no bin is supplied. They are not getting the three bins being provided. They are retaining the plastic bag service and have to buy the plastic bags. They get no provision, good, bad or indifferent, towards recycling of household waste. Domestic charges are being imposed by the back door. This is another imposition on the hard pressed taxpayer. It is a domestic charge because virtually every household has a motor car. People have no choice because there is no public service worth the name and money has not been provided in this area.
Senator Manning said approximately £3 billion is collected from the hard pressed motorist, 16% of which is reinvested. Those figures are colossal. Where is this money spent? It is simply another Exchequer tax that is not used for the local authorities, for the benefit of the road user or to develop the infrastructure required. There are many problems in that respect.
The licence fees have been mentioned, but the Government has done nothing to improve the excessive cost of insurance for young people. For more than 12 months, we have been sitting on an initial report showing that young people are losing out very badly on insurance costs. If it will cost £2,000 to £3,000 for a person under 25 to get insurance, this is another huge tax on the long suffering motorist. It does not reduce the number of people using cars because second hand cars are now quite inexpensive. The cost of motor taxation, a licence and insurance are huge and are unrelated to the value of the car.
We have found that these sectors of the driving community have been far less involved in accidents than the insurance industry has given us reason to believe. At a minimum there has been a degree of misinformation by the motor insurance industry in order to maintain high levels of insurance premia for young drivers. What is the Minister doing about that? Why has there still been no action? It is a number of months since we debated that and the Minister said he was waiting for a final report, even though he had the interim report on his desk for more than 12 months.
Health and safety within the motor industry are very important. Of all the tragedies we experience almost on a daily basis, deaths on the road are among the most horrific. Accidents cause so much suffering to families and of course to the victims who are either fatally injured or maimed. We have been completely unsuccessful in reduc ing the number of deaths on the roads. The Minister and his Department should inject some funding and some energy to try and do something about the matter.
In his speech, the Minister stated that the fees for the collection of motor tax are recoupable from the local government fund. There seems to be a contradiction; on the one hand he says that under existing legislation, the collection of motor tax is recoupable from the local government fund and then he says that the Local Government Act, 1998, does not specifically refer to the recoupment from the fund of the costs associated with the administration of these fees. It appears that the Department is recouping its fees from the local government fund even though the legislation does not make provision for that. Should the Department not pay for the fees that are associated with the collection of motor taxation? What fees are there for the collection of motor tax? I thought most of it was collected by the local authorities rather than by the Department.
Mr. D. Wallace Mr. D. Wallace
Minister of State at the Department of the Environment and Local Government (Mr. D. Wallace): I appreciate what has been a very useful and constructive debate, which has given much food for thought and covered a wide span of issues. I thank all Senators who contributed and assure them that I have given and will continue to give serious consideration to the various issues raised and suggestions made.
The last time motor tax rates changed was in January 1999. The changes in the Bill are fair and reasonable. It is a necessary Bill so that the local authorities have sufficient funds to meet their many obligations. Local authorities current expenditure is met from a range of sources. In 2001 local authorities' current expenditure is estimated at £2.1 billion. General purpose grants and finance from the local government fund are an important source of local authorities' funding representing about one fifth of total current income. They are discretionary and may be used by authorities for funding whatever day to day operations they deem necessary without the need for approval from the Department.
Senator Manning suggested the Bill is a raid on local government funding; it is anything but that. The increased motor tax will add to the fund, not take away from it. As the House is aware, such operations span a wide spectrum, covering a multitude of areas. As I mentioned at the opening of this debate, these areas cover housing, maintenance, roads, water and sewerage, planning, the natural environment, recreation and amenities, community development, etc. The additional resources that arise from the change in motor tax rates will help local authorities to meet their commitments in this regard and to provide more and better quality services to the community. The local government fund is also used to finance non-national road grants and the additional resources brought about by the increase in motor  tax will allow work to continue on improving the non-national road network.
The Minister, Deputy Dempsey, never claimed this Bill introduced a green tax as suggested by Senator Manning. The Minister always said this was a greening of the existing tax. Larger cars use more fuel and give rise to higher levels of carbon dioxide emissions. Apart from the revenue raising aspect, this Bill is designed to rebalance motor taxation rates in such a way that it will have a positive impact on the environment. In this Bill, I intend to send a green signal to consumers that smaller cc cars use less fuel, pay less vehicle registration tax and less motor tax. If the result of this message achieves anything close to the outcome of the restructuring of the VRT bands in January 1999, which last year resulted in an 8% increase in the purchase of new cars up to 1,400 cc at the expense of cars in the 1,401 cc to 2,000 cc range, it will be a worthwhile exercise.
Senators Manning and Costello suggested that this motor tax increase was sneaked in; this is not true. Motor tax is not a budgetary issue. Policy in relation to motor tax does not form part of taxation policy generally. Motor tax, unlike all other taxes, is not paid into the Exchequer. Under the Local Government Act, 1998, motor tax is paid directly into the local government fund. Before 1997, when the motor tax was paid into the Exchequer, provision was made in the Finance Act for any changes in the rates of the tax. However, in 1997, the Fine Gael/Labour/ Democratic Left coalition Government decided to divert motor tax from the Exchequer and to assign it directly to local government. Then 80% of the tax on private cars and all tax on commercial cars were paid directly into the local government equalisation fund and the balance of 20% of private car motor tax was retained directly by local authorities. This was done under the Local Government (Financial Provisions) Act, 1997.
The Act also made provision allowing local authorities discretion to increase motor tax by up to 6%. This legislation was promulgated by the Government completely outside the budget or Finance Act agenda. The local government fund followed the equalisation fund and the same practices are applied. The proceeds of motor tax no longer go to the Exchequer and the practice is for changes to the motor tax regime to be dealt with outside the budgetary and Finance Bill system.
Senator Manning referred to the problem of road safety and I agree with the importance of tackling this issue. We have just passed the mid point in implementing the Government's strategy for road safety for 1998 to 2002. The interim targets under that strategy have been fully met, i.e. to reduce Ireland's rate of road fatalities by the end of 2000 to a figure not exceeding 116 and to complete specific accident reduction measures at 240 locations on the national road network. All road safety agencies are striving to achieve the targets set in the Government's strategy and a number of measures are being employed to achieve these targets. Garda enforcement has  been intensified in relation to speeding, drinking and the wearing of seat belts. Speed cameras and evidential breath testing have been introduced and are being further extended in support of this process. Research into the involvement of young people in road accidents and the problem of drugs and driving is being advanced. Education and information in relation to road safety are being improved, including joint promotional campaigns with the Northern Ireland authorities.
This Bill, in conjunction with a new road traffic Bill, will help to improve road safety. It provides for a range of legislative measures aimed at achieving a further reduction in deaths and injuries on our roads. Its primary focus is on road safety, treating road traffic offences much more seriously than heretofore and with the severity which they deserve. I agree with Senator Manning that we can never afford to be complacent about road safety and this Government will continue to work to improve the situation.
The rates of motor tax for certain vehicles, including all electrically propelled vehicles, are not being changed. Motor tax applies to all mechanically propelled vehicles regardless of how the vehicle is propelled. Since motor tax is now an important part of the local government fund and is distributed to local authorities to finance their activities, it is appropriate that all types of vehicles contribute. I have no difficulty with the principle of keeping motor tax on environmentally friendly vehicles to a minimum and that is reflected in the Bill.
Senator Henry raised the question of disabled drivers being exempted from motor tax. At present, disabled drivers are exempt from motor tax under regulations made by the Minister for Finance. The scheme also provides for exemption from VAT and rebate of fuel duty.
Senator Costello suggested that it was the rainbow Government which introduced the system of local government funding through motor tax and Exchequer contribution. I remind the Senator that the equalisation fund introduced by the previous Government comprised motor tax only and did not include any Exchequer contribution, which was introduced by this Government. In 2001, the Exchequer contributed £319 million, a very substantial sum indeed. The general purpose grants for local authorities have increased by 63% in the four years since this Government came to office.
I hope I have dealt adequately with the matters raised in this debate and I thank Senators for their contributions. As I have indicated, the Bill is a follow-up to the financial resolution on motor tax rates which was passed by the Dáil on 8 March 2001. A number of issues have been touched on, either by way of suggestion or seeking clarification. I hope I have dealt with each issue as fully and helpfully as I can.
Question put and agreed to.
Mr. Costello Mr. Costello
Acting Chairman (Mr. Costello): When is it proposed to take Committee Stage?
Mr. D. Wallace Mr. D. Wallace
Mr. D. Wallace: Now, with the agreement of the Opposition.
Acting Chairman Acting Chairman
Acting Chairman: Is that agreed? Agreed.
Seanad Éireann 167 Motor Vehicles (Duties and Licences) Bill, 2001: Second Stage.