Sunday, 14 June 2009

We’re not a low-tax economy, Part ∞. End VRT now!

It’s been said before on Gombeen Nation – we don’t live in a low-tax economy. Not unless you’re Microsoft, Bono or one of our many millionaires who avoid paying tax to our cash-strapped exchequer through perfectly legal means. But someone has to pay it, right?

Step forward the PAYE worker, who pays top-rate tax on earnings over €36,400– not to mention the income levy. (PAYE workers paid €10 billion of the total income tax take of €13.5 billion in 2007). Step forward VAT, at 21.5%. Cheque book tax. DIRT tax. Insurance premium tax at 2%. Credit card tax.

Possibly most criminal of all – as it contravenes the principles of free trade within the EU - is VRT (Vehicle Registration Tax). Again, it is not the first time it has been mentioned on Gombeen Nation (do a search to confirm). But a look in the motoring section of today's Sunday Times brought it fresh to the surface here like a recurring cold sore.

Jeremy Clarkson has a review of the Mini Cooper S convertible in that paper. It might be a car you are interested in, or it might not. But never mind that, it's a subjective thing... but the same applies to any car you might be interested in. The Mini's not a gas-guzzler, it’s pretty cute, and it’s a fun vehicle by all accounts. And it's not even a real Mini – so you shouldn’t have to push it. In fact Clarkson says its as near to being a mini as “Julie Andrew’s (Sound of Music) nun frock.” So that’s good news all round.

What isn’t good news, however, is the Irish price for such a vehicle. Across the water, or across the border, our counterparts only have to pay £21,205 (€24,885) whereas we have to pay €40,350. That’s a staggering €15,465 more that the Irish motorist has to pay in tax to buy this car.

When the Irish politicians knock on your door in the next few months looking for your Lisbon Two ‘yes’ vote, ask them when they are going to be good Europeans and honour repeated EU requests to scrap VRT.

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Harald75 said...

Hi GM,

totally agree with you: VRT is a thing from the past.
But something might be wrong with your calculator I guess ;-)

Ella said...

Hi GM, The European Commission has begun proceedings against Ireland for infringing EU law by charging VRT on vehicles imported from other EU Member States. The proceedings go back to a case registered in 1999 by Niall O'Dowling of Used Car Importers of Ireland (UCII) against the "secret and arbitrary" way that VRT is imposed. The European Commission has confirmed that proceedings have been opened but added that "no public information is available at the moment". It's about time somebody brought a case. I can see that Mr O'Dowling would have a bigger incentive than a private individual, but even so. The rest of us moaned and complained but did nothing. So fair play to him.

The Gombeen Man said...

Thanks for spotting that Harald. I had subtracted the Sterling price from the Euro price rather than Euro from Euro. I've amended it now to the correct figure: €15,465.

Ella, I shall be watching this one with interest. It's amazing that the Irish Government has been able to get away with it for so long.

Lew said...

I read that with interest as I'm considering "moving back" sometime at the end of next year or shortly afterwards.

I knew about VRT and it was a complete rip off but the amounts they want is totally out of this world.

Something that I haven't seen mentioned anywhere is the following from the VRT online section in the case of new vehicles

"VAT is chargeable and normally payable at the time of registration in the State, even where there is evidence, e.g. an invoice, that VAT was paid in the country of purchase."

They charge you for vat when it's already been paid???
Surely this is illegal? how can they get away with it?

I'd also like to know the following, other than the goverment who likes to rip the small people off -
Where in the world would a car of up to 6000Km "on the clock" be classed as new and subject to vat on top of vrt?

Thats my moan over with, for now :)

As to my revent trip it was brilliant, the weather was really good other than one day and thats no hard.
First time over there in 8 yrs, so many people wanted to see me that I didn't have time to go and see and the other half loved it so much.
It was quite funy on coming back she went to put some rubbish in the range then swore when she realised she was home again and there wasn't one!

she couldnt get over how friendly everyone was, and the fact everywhere we went insisted on making tea and trying to feed her biscuits and cake.

The Gombeen Man said...

Yes Lew, it's stunning that they've got away with it for so long, and a public outcry is conspicious by its absence.

One piece of advice: When I came back to Ireland in 1997 after 12 years abroad, I had a battered old Nissan Bluebird. Our VRT civil servants insisted I supply wage slips and utility bills to prove I was actually living away. And this was with an ancient heap of junk! I pointed out to them that I was not importing a new Ferrari, but they wanted everything. They were a complete bunch of arseholes and it was one of those "here we go again, welcome home" moments, after the initial joy of being reunited with old friends and family and getting a job at "home" again. Be warned, have everything with you for the useless bureaucratic jobsworths!!!!

I'm glad your trip back went well. Sounds like you had a great time. All the best if you "come back". Got anything lined up?

Anonymous said...

Shee-ite 40K for a Mini?!
Here in San Francisco the mini S convertible costs about $27k (dollars!) plus sales tax of about $2200 and that's after being shipped halfway around the world. That's 21K in Euros - about half the price.
I don't think I could afford to move home if this is the cost of things. I knew it was more expensive but I didn't realise how much.

The Gombeen Man said...

That's according to last week's Sunday Times, Kathy. The model featured is the range-topping Mini Cooper S-version convertible. I assume there might be extras on top of that, which all attract VRT (which applies to the list price of lesser versions too).

If you're into your wheels, Ireland is not the place to be, I'm afraid. Believe me, I know!

Anonymous said...

Hello GM,
My moan is if vrt was scrapped, More new cars would be sold in Ireland, therefore more would be taken in vat. this would support the car dealers and help create employment across the country and the money that would have been spent on vrt would be otherwise spent in local shops and having their cars serviced. buying a car is the second biggest purchase after a house But for the price of some cars in Ireland these days and the way house prices have come down you nearly could buy a house for the price of a car.
If everyone in Ireland buoycotted buying a new car for six months in demostration against vrt maybe goverment might rethink this illegal tax. But I doubt it, they dont care about us.
By is there a pertition we could sign against vrt. thanks Baz.

The Gombeen Man said...

You're absolutely right, Baz. VRT is a scandal and I'm amazed they manage to get away with it.

I don't know if there is a petition, but if you find one, please let me know. As it happens, it's a subject that comes up quite a lot in searches that lead to the blog, so we're not alone.

Suppose the other alternative is for me to set one up on this blog, as the subject features pretty prominently.

Thing is... not the most technically minded, so I wouldn't have a clue how to do it.

Then again, they would just ignore it anyway, I think. I reckon the best angle is for someone to take it to the EU. Individual countries can still control their own tax affairs (unfortunately) but I'm sure someone would have a case on the basis of lack of transparency.