VRT in 2013: Submission from FGAI

2013: VRT Rates and Bands:
While Fiat Group Automobiles Ireland (FGAI) would much prefer to see an end to the disproportionate and unfair tax burden levied against the motor sector, it realises that the Government is hugely dependent on this sector as a source of tax revenue, particularly in these tough economic times, and acknowledges that such changes are unlikely to occur at any stage in the immediate future.

By the same token, the Government must also realise that if it wishes to glean more revenue from the already hard-press motorist then increasing the VRT rates or re-aligning the VRT bands will not have the desired effect. It will, in fact, have the opposite effect, deterring new car purchases which will likely result in an overall drop in tax revenues in 2012.

The recent Scrappage Scheme highlights this point – while the VRT earned was less per vehicle sold, car sales increased substantially resulting in a boost in the overall revenue take – a win-win-win scenario where motorists, the motor industry and the government all benefited.

FGAI therefore hopes that the Government will avoid increasing VRT rates and instead looks at ways of supporting and stimulating the motor industry rather than penalising it and its customers even further. The motorist is already burdened with high levels of fuel duty, carbon tax, motor tax and VAT. Further increases in vehicle taxation will serve as a hammer blow to an industry already on its knees, forcing even more dealerships to close and thousands more jobs to be lost, something Ireland can ill afford at present.

Ireland’s Number Plate System:
As of the end of February new car sales in Ireland in 2012 are down by more than 25 percent compared to 2011 and there is now no likelihood of this situation improving until the next registration cycle rolls around in 2013. Effectively, both the motor industry and Revenue are facing ten lean months in terms of new car sales with no hope of a mid-year spur to recoup some of those losses.

For this reason FGAI is strongly behind a change in the out-dated number plate system we currently have in Ireland. Not only would it generate renewed interest in new cars in Ireland it could also remove the appalling January-to-March seasonality associated with car sales at present. The current system – which is dominated by the year identifier – was introduced at a time when it was in consumers’ interest to know the exact age of a second-hand car. However, technology has since advanced to the extent such a rudimentary system is no longer required and the exact provenance of a vehicle can be determined digitally within a few moments.

Removing the year identifier also allows people to change vehicles when they require a new vehicle rather than compelling them to wait until the depths of winter so as not to be burdened with a late-year registration which immediately depreciates the vehicle once the New Year rolls around.

The current new car buying period is also right after the Christmas period and just as the December budget changes come into effect, further dis-incentivising buyers from new car purchases.

The Society of the Irish Motor Industry (SIMI) has outlined its desire to see a change in the number plate and FGAI wholeheartedly agrees with its proposals.

What can be used to replace the current system?
In the event of a new system being introduced, FGAI is concerned as to the layout of the new system – the year identifier is the single cause of the seasonality of Irish car buying habits and must be abolished in its current form, particularly as we face into 2013 and the prospect of a year of unlucky “13” cars. A bi-annual plate system would be a huge improvement and the easiest to implement, as it would simply require changing the first two digits every six months, skipping 13 altogether.

Therefore, a January 2013 number plates would look as follows: 14-D-1234; while a June plate would be 15-D-1234 and so on. Using this system, there are enough unused prefixes to see us through to the year 2049, 35 years from now. (The current plate system has been in place for the past 25 years.)

The county identifier should also pertain to address of the registered owner, not to that of the first buyer, and re-registration really should be mandatory for all new owners in different counties. At the very least, the possibility of re-registration should be an option to used car buyers, facilitating greater movement of vehicles around the country, subsequently boosting resale values.

To avoid number plates with more and more characters, FGAI also suggests introducing a new system that incorporates letters as well as numbers, e.g. 23-D-T58A. Doing this reduces the numbers of characters on Irish number plates, thereby making them easier to see and read at a distance.

Such a system also increase the possibilities for “vanity” plates, another potential source of income worth at least €1.5 million per year in the current climate (extrapolated from the UK’s DVLA 2010 €16m revenue and assuming we charge a more reasonable rate of €250 versus the current €1,000 per private number).

Finally, FGAI thinks it is ridiculous that anyone, even people not directly involved in the motor industry, can purchase or make number plates without any proof of ownership of that number. All number plates should be standardised and issued by the state with some form of in-built, anti-forgery technology to help minimise the number of cloned or falsely represented vehicles on the road.