Hi There,

The Commission for Taxation recommended the abolition of VRT to be replaced with useage taxes on petrol and diesel. We welcome this recommendation as we have been campaigning for the removal of VRT for some time. The retail motor industry in Ireland has commissioned its own independent analysis of the industry which also concludes that VRT should be abolished but this analysis has reached its conclusion based on the impact VRT has on consumers and the industry. The main reasons for this conclusion is that VRT is anti consumer, anti competitive, is a barrier to entry into the market, contradicts the objectives of the EU single market, prevents Irish consumers and dealers from selling their used cars in the UK and most importantly of all is an inefficient method of taxation i.e. the cost to the general economy of the tax outweighs the revenue collected from the tax. This independent report which deals with all facets of our industry will be published in the week beginning 21st September. We will post a copy on our website for interested parties to download.

The report also urges caution on the exact method used to remove VRT. The July 08 VRT reductions caused significant disruption in the market and resulted in the value of every used car in Ireland decreasing significantly. This is a common misconception surrounding VRT. The common belief is that VRT only relates to new cars so if I am not in the market for a new car it doesn't affect me. This is incorrect, there is residual VRT in every car in the country and there are over two million cars in Ireland. Changes to VRT will effect everyone through the reduction in value of new cars and the knock on reduction in value of used cars. This is a short term consequence of VRT reductions but it will benefit everyone in the future as when new car prices are reduced, it will open up choices for consumers to purchase new instead of used, purchase a higher specification car, reduce finance payments required to buy a car etc. These benefits will be offset by higher fuel charges. Therefore, the more you drive the more you pay. It will be the use of transport not the method of transport which the Commission for Taxation is recommending taxing in the future. We believe that this is a fairer method of taxation.