Monday, 20 February 2012

Public Consultation on VRT

I am sick of it, I really am.  Last week I got a renewal letter from my motor insurance broker.  I was somewhat disconcerted to note that my premium had gone up by 75% on last year's quote.  75%!!!!  

Before you ask, no - I was not done for drink driving.  I did not crash my car into a ditch or a wall.  I did not even get a single penalty point.  I have a clean driving licence, car, motorcycle, truck and bus.  I have the full no-claims bonus.  I have never made an insurance claim in my life, or had one against me.  Oh, and I don't own a MINI.

The reason - the broker explained - is because St Paul's, the insurance company that covered "niche vehicles" (in an Irish sense)  - has pulled out of the market.   Recession-torn Ireland is not a great place to do business, it would seem. 

Much of it can be blamed on VRT, in my view.  That and a compo-claim culture that makes insurance costs in Ireland - and the cost of living and doing business - far higher than they are elsewhere. 

There is currenty a consulation process (such as these things claim to be) on VRT.  If you want to have your say on the unfair Vehicle Registration Tax, please email your submission to the address below.  Include your name and address:

 For what it is worth, here is my submission:

Dear Madam/Sir.

I would like to suggest that, rather than playing about with VRT, your Department should simply abolish this unfair tax which is contrary to the principle of free movement of goods within the EU.

VRT was only introduced by the Irish Government of the day when vehicle excise duty was abolished by the EU. It is a disgraceful tax, Kafka-esqe in its lack of transparency (particularly the cooked-up Open Market Selling Price notion), and means that I, as an Irish citizen, cannot avail of the EU market when buying or selling my car.

It means that my fellow Irish citizens are forced to pay nearly twice as much for their cars, in some cases, as their lucky counterparts across the border who had the sense to maintain their union with Britain. A year or two ago, the Commission on Taxation - paid for by the Government - suggested that VRT be phased out. I believe your Department should, for once, heed advice it - through the taxpayer - has paid for.

VRT has a knock-on effect in the Irish economy as a whole, as it also inflates the cost of insurance, as vehicles have a much higher capital cost in this country purely because of VRT. If a car costs 40% more to buy, it is not unreasonable to surmise it will also be far more expensive to insure.

 It is also an anti-aspirational tax, as Paddy and Mary can only dream of owning higher-spec vehicles that are within the reach of ordinary working people in other countries. That has an effect on the motor industry too, of course, who have been remarkably compliant on this issue - possibly concerned for selfish reasons about the used car market seeing lower prices should VRT be scrapped.

This is not a valid argument. If I buy I car for €50,000 and it depreciates by 50% in three years, that means I must find €25,000 to replace it. If I was a British subject, and bought it same car for €30,000 in the UK, I would be looking at depreciation of €15,000.  My used car might be "worth" less as I sold it on, but I would be paying far less for any car I might buy. So SIMI and the rest should cop themselves on and look at a revived industry that would come about after the abolition of VRT. 

Remember too, that you can place a 100% tax on cars if you like, but you will not get a single cent if nobody can afford to buy them. Cheaper cars would mean more sales, and even then the Exchequer is creaming 23% VAT on each unit sold.

Motor manufacturers have been making great strides to make their cars cleaner and safer - this very consultation process admits to being prompted by the fact that manufacturers have cleaned up their act considerably, particularly the likes of BMW, and are producing vehicles which emit far less CO2 than a few years ago. They should be rewarded for this, not penalised. Or does the so-called "green" element of VRT and motor tax refer to "green" in an envious, rather than an environmental, sense?

The Irish government should stop robbing the Irish motorist blind. It does that well enough with road tax, in a country where motorways are tolled and some byways resemble a landscape from the Battle of the Somme.

Stop tweaking VRT.   Abolish it.

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Ella said...

Hi GM, the Irish government have it every which way now. We pay VRT for our over priced cars, at prices that are exhoribitant in comparison to our European neighbours. Now we are being told as a part justification for property taxes and water charges that our European neighbours pay these taxes. They do, but most don't pay VRT too. Seems like we get shafted every which way.

The Gombeen Man said...

@ Ella. We certainly do, Ella. We get all the bad bits of everything.

Dakota said...

Ella, yes and remember that there is years of so called austerity to go. Our European neighbours pay many taxes and in many cases their income tax is higher than here, but they don't have the welfare culture, have excellent services and fundamentally better transport networks. For example in the French Capital the bus service is not to good but there is always the underground alternative. Ireland is third world in many respects.

GM, VRT does have a lot to do with it but the real pain is the compo culture in your case?

GM you have a bus licence? Hope it's not Dublin Bus approved?

The Gombeen Man said...

@ Dakota. Glad to say I got a better quote from the AA... so that 75% is not going to happen, this year at least, thankfully.

No, don't worry. I work in the print/publishing sector, but happen to have truck and bus categories on my licence. Full motorbike and car too, obviously.

Just a bit of hobbyist, sad and all as it is! Wouldn't mind getting a HGV one to round it all off but it is financially prohibitive!

Had a go in a microlight in the past too, but again, the cost of taking if further put me off. Just a big kid where things mechanical are concerned D. I blame it on collecting Dinkys and Corgis as a young lad.