Thursday 14 November 2019

Tax places heavy toll on motorists

Motorists already hard hit by increased fuel prices will suffer more pain soon. Prices will rise again when the carbon tax is raised from €15 per tonne to €25 per tonne in December, and the Government is considering numerous new motorway tolls.

The plight of those -- the great majority -- who have no option but to pay up illustrates the multiple dilemmas in which the Government finds itself in its struggle to find adequate revenue without strangling the economy.

Obviously we have no control over the price of crude oil, but we do have control over the taxation which makes up a huge proportion of the price per litre of the refined fuel. Dermot Jewell of the Consumers' Association puts forward the intriguing idea that the Government should refrain from increasing tax when the price per litre exceeds €1.30.

He also makes a point which must have occurred to every motorist in the country: "The roads are in a disastrous state, and what are we going to get for our money?"

That is certainly true of secondary roads, to say nothing of city streets, and it raises the question of fairness. So does the proposal for more motorway tolls. These motorways have already been paid for -- often with European money -- and the outgoing Government dodged its own responsibilities by leaving them devoid of service areas.

But the greatest difficulty with these and other revenue-raising measures, like the property taxes and water charges still to come, is not the inconvenience of a specific group of people but the effect on the entire economy.

This is outstandingly the case with fuel prices. The effects of increases are felt immediately across the business spectrum. Humbler citizens suffer when the cost of running an average car rises by €84 a month, to €225, in just 24 months.

Meanwhile, efforts to serve other purposes besides revenue-raising can come up against "the law of unintended consequences". In 2008, over €1bn was raised in vehicle registration tax, but this has fallen by two-thirds because people took advantage of a new system designed to reduce carbon emissions.

And much as one may admire Finance Minister Michael Noonan as he struggles to repair the economy, it is worth pointing out that he also needs to undertake a project which his predecessors neglected. We need something we have never had, a genuinely fair and rational taxation system. This is as good a time as any to work on it.



Irish Independent

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