Sunday 26 January 2020

Should car tax be abolished?

Tax disc
Tax disc

Bob Flavin

Change to Direct Debit, move the tax to fuel people would drive more, what's not to like?

There’s no one in the world that enjoys paying tax and when it comes to car tax there’s even more of a problem. It’s a bill that, depending on how you pay it, comes in every three, six or twelve months and even thought we know it’s coming we do very little to prepare for it.

Car’s can be written off the road for a few months but you have to know just how long it’ll be off the road before it’s off. So there are many good cars out there just hanging around the drive ways of those who can’t afford the tax or are working in another country.

There are others out there who just can’t or won’t pay road tax because it’s too expensive. Some of these people are stuck in an endless cycle of owning a car that’s in the old tax systems which is based on engine size where a standard 1.6 petrol will set you back over five hundred Euro a year in tax alone.

If people can’t afford car tax now what’s going to happen as other household bills like water charges start clawing more money away?

There are a number of solutions to the car tax problem, the first of these could be started tomorrow and would make paying a little easier for everyone. Direct Debit.

It’s €544 a year to tax a 1.6ltr engine under the pre 2008 system, if that comes in as one bill it can be very hard to find the full amount. If you break it into 12 payments it’s €45.34 a month which would be a lot easier to find. This wouldn’t be hard to start for the Tax office, just let people sign up online. I mean the TV Licence can already be paid in any number of ways including direct debit.

Now the big one, we can get rid of motor tax altogether. Don’t all jump for joy just yet because it’s just moving to fuel instead.

I am a big advocate of shifting motor tax onto the fuel we buy, I am aware that fuel is already loaded with taxes but I’m taking about one or two cent here.

So what happens if we go this route?

1. Motor tax offices close because there are no arrears or discs and change of ownership is performed online.

2. There’s no forgetting to pay road tax, every time you put fuel in the tank you pay it.

3. Those who drive more pay more. Seems simple I know but you won’t have to pay tax on a car that only does 5,000kms per year. But those who drive a big fuel guzzler will have to pay more because they use more fuel.

4. No more paperwork, reminders, red letters or any other contact from the motor tax office would save a fortune in postage alone.


So why aren’t we getting rid of it?


Money. At the moment the Government can look at how many cars are paying tax and get a good idea just how much will be raised from Motor tax every year. If it moved to fuel they could only estimate depending on driver habit. There’s also the problem of fuel laundering and people near the border who will buy it there. In an ideal world this could easily work, it’s worked in New Zealand for many years, even France moved the tax to fuel but Ireland seems to have a blind spot with it.

While there’s many good and bad points the big factor here is choice; drivers would be able to make a choice about how much tax they pay. If they want to have a car but only use it at the weekend then no more paying for a lump of metal that sits outside the door 75% of the time.

Older cars would pay the same taxes as the newer cars which would bring more trade to the used market which would increase the tax take on everything else.

It’s about time that the motorist in Ireland got a break, they pay tax on everything and when you look at VRT and VAT there’s even a tax on a tax surely we can get rid of the biggest problem Motor Tax.

With a budget on the way let's get the discussion going now.

What do you think? Get in touch on Twitter @indomotoring or email


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