Sunday 21 December 2014

Take our money – we keep the joy

Published 02/12/2012 | 05:00

Motorists will be hit hard in the Budget, but there are ways to cut costs and still enjoy the ride, writes Campbell Spray

LET'S be frank about it – the motorist is going to get hammered this week in the Budget. Yet nearly everyone who has bought a new car in the last four years not only deserves a medal from the car industry but has saved considerable money that they would have otherwise paid in motor tax and VRT.

They are also at last benefiting from an industry that is now doing somersaults to advance money – Volkswagen bank alone is lending €125m this year – and giving far better warranties and servicing deals. The price of many premium models has been slashed by the new VRT rules and the effects of the recession. Cars have also made major strides in safety, consumption, emission cleanliness and connectivity in the last four years.

This has come at a far faster pace than in the previous decade. Basing motor tax and VRT on emissions may have been from the best green intentions but was not thought out from the point of view of tax take, engine development or other more toxic pollutants than CO2 levels. The timeline of being introduced halfway through the year was also regrettable, although the whingeing of the car lobby was pathetic and a lot of pain was self-inflicted. The rush to diesel was wrong and, as my colleague Martin Brennan reports, is at last being reversed.

Some of the figures are quite frightening and show the job the Government has to do to make ends meet. In 2007 the State was getting €1.4bn from new car sales; last year it was around €400m. The average road tax for new cars bought since the middle of 2008 is €218, compared with €444 for those older cars taxed on engine size. Now more than 92 per cent of all cars sold are in the two lowest-paying tax bands compared with around 18 per cent in 2007. The current emissions bands are likely to be sub-divided, with focus primarily on bands A and B. One possible permutation is for band A1 to cover 0–100g/km, A2 for 101– 110g/km and A3 for 111– 120g/km. Band B could then be split evenly into B1 and B2, covering the 121–140g/km gap.

Data provided by Cartell.ie, the vehicle records experts, reveals that only 2,500 vehicles registered following the tax regime change in 2008 fall into band A1 and 16,500 are in band A2; while a considerable 114,000 fall into band A3. Just 70,000 cars are in band B1 and 130,000 in band B2.

Setting band A1 to the current band A's €160 annual fee, plus an expected increase in the region of 10 per cent, brings the lowest tax to €176. Using the same theory throughout results in Bands A2 and A3 costing €198 and €220 respectively, while bands B1 and B2 come in at €248 and €303. Cartell.ie says that applying these annual tax rates to the number of cars in each band results in a total tax take of over €85.5m. If the tax scheme did not change then the total would be about €66m. It is also expected that the rates for older cars (currently ranging from €185 for a sub-1.0-litre engine to €1,683 for cars powered by engines of 3,001cc or more) will increase by a fixed percentage.

However, the Budget and its brutality is a good time to take stock of your motoring requirements. Do you really need more than one car?

Even one at all? The size of your vehicle can often be reduced. Work out how many times all the seats are used. Spend money on safety – especially on good tyres – at the expense of everything else.

A survey in Britain last week showed that people are now walking 80 miles less a year and using their cars for shorter journeys.

This is madness on so many fronts. Health, precious cents and the mindfulness of walking are being lost for no good reason. The growth of cycling in Dublin aided by the Dublinbikes scheme shows one of the ways forward, but better public transport planning is needed too. It is a bit like the hypocrisy of needing the large tax take from cigarettes and alcohol but preaching that we need to give them up.

But let's not be too negative. Motoring is both a necessity and a pleasure.

We can cut the cost by doing everything a bit more wisely and thinking about the old slogan: "Is your journey really necessary?". There is also a lot of fun to be had. If you can, get rid of that expensive car and invest in an old convertible and put some joy back into your life. A smile and a bit of wind in your hair is worth a thousand grumps.

Indo Motoring

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