'Mini' Budget set to Cost Motorists Big
The government has announced that there will be new budget measures announced in the first week of next month. With the lamentable state of the public finances, the AA warns that motorist is in the firing line as the 'old reliable', as in days of old. At a minimum it seems inevitable that there will be increases in fuel excise duties, and look out for other measures as well.
Government revenue from VRT receipts have fallen dramatically in 2009. At the end of January they were down by 86% on last year with no sign of any improvement since. In the first month alone this meant the tax take from car sales dropped from €213.5m in January 2008 to just €30m in January 2009.
New car sales have not stopped entirely, and for the optimists among you there is some good news. Car registrations fell by 'only' 66.5%, meaning that when people are buying they are opting in large numbers for cleaner and greener cars. Average CO2 figures for new cars are improving and sales of ultra-low emission ‘Band A’ cars, which pay a road tax rate of just €104, are actually up by 114%.
The SIMI has called for the government to introduce a new scrappage scheme to incentivise people to trade in older polluting cars for newer and far cleaner ones. We have always believed that incentives work better and more fairly than punishments and the AA has decided to back them in this call. People will remember the previous scrappage scheme the late 1990s. This was credited for improving cars, stimulating trade and generating extra tax income although it was of course in a much more favourable economic climate.
As for the vaunted infrastructure projects, the AA expects to see almost no progress this year on schemes like Metro North and the Luas extension. There may be no formal announcement on them but with public enquiries grinding slowly and money desperately tight there will be virtually nothing spent on them and certainly nothing visible on the ground this year at least.
So the AA does not expect miracles, but it does seem as if the Government are listening. There is likely to be a new scrappage scheme of some sort, but whether it will be announced in next month's budget or not remains to be seen.
Expect a hit next month, but let’s hope there are constructive measures to be supported as well.