Budget change to road tax would damage trade -- SIMI
ANY major budget change to the current road tax bands would destabilise the market, the Society of the Irish Motor Industry (SIMI) has warned.
Road tax generally has come down significantly in new cars because the new emissions-based system favours diesels in particular.
That has given rise to what is called the 'BMW 520d' factor, whereby executive cars with low emissions are attracting the lowest (€104) road tax possible.
This has led to grumblings in several quarters and prompted widespread speculation that the bands will be 'revisited' with a view to getting more tax into government coffers.
But the SIMI yesterday warned in its budget submission that doing so on any sort of extensive basis would cause chaos in the market.
Significantly it used the word 'destabilise' the market. Such a warning at a time when sales are low, and expected to remain so for next year at least, can only mean one thing: job cuts.
The society also warned against any changes in the current Vehicle Registration Tax band structure or any increase in the the rates (which currently start at 14pc).
As if to underline the perilous state of the market, latest figures from the SIMI show that new-car sales for October were down 52pc on the corresponding month last year.
On the back of the scrappage scheme, which ended mid-year, however, sales overall to date are 3pc up on last year.
Next year will provide a stern test for buyers and sellers as they will not have the impetus provided by the scrappage scheme, though it is generally accepted that there is a lot of pent-up demand still out there.
Much will depend on what is done on the motoring front in the Budget and how the euro crisis pans out.
The SIMI submission, in an attempt to even out sales across the year and avert the huge bulge that marks the start of every new year, also called for changes to the current registration plate system.
Its president, Gerry Caffrey, said: "Nearly 50pc of new cars are sold in the first quarter of the year, which puts huge pressure on resources, from staff to cash flow.
"For those working in the industry, it is impossible to know if they will still be employed at the end of the year."
The society is proposing two changes which it claims can solve the problem and generate revenue.
The proposals are:
•A special 'identifier' such as an extra character on the registration plate. This would apply to all vehicles registered after July 1, 2012 to create a second 'new car sales peak'.
The SIMI reckons this would generate an extra €20m in VAT and VRT each year.
•Allow a consumer or motor retailer to get a used vehicle's registration plate re-designated to the county of residence of its new owner.
The reasoning: "Based on a charge of €250 for this re-designation, it could deliver an additional €20m for the Exchequer in year one alone."
Mr Caffrey said: "Many cars cannot be sold outside of their county of registration because some customers may have a preference for driving a car with their own county number plate.
"I've no doubt that this option would be taken up by many consumers."