Dumb it down

The Irish Government has been ordered to change their existing laws on Vehicle Registration Tax (VRT), but why and what will it mean for the Irish motorist?

For God’s sake, they’re not talking about introducing yet another new tax, are they? I’m still coming to terms with that bloody household charge ...not that I’m going to pay it or anything.

No, no. If anything, these new laws on VRT will be good for Irish motorists.

How so?

Basically, the European Commission have said that Ireland’s laws are unfair in regard to vehicles being brought into the State.

As it stands, people importing vehicles into Ireland that are less than three months old or have less than 3,000 kilometres on the clock have to pay the same tax as people who buy a brand spanking new automobile within Ireland’s borders.

And what’s wrong with that?

Because there’s absolutely no allowance made for depreciation of the vehicle. If you bought a brand new car and for some strange reason, you wanted to sell it off two months down the line, you’re hardly going to expect to make all your money back, are you?

Similarly, the EU commission say that people who import almost new second hand cars into this country shouldn’t have to fork out the same amount in tax as the lucky ones who can afford to buy brand new cars in Ireland.

So what does it mean for us?

It means that, potentially, there could be a fair increase in the number of people heading up north, or across the pond, in search of a bargain. According to a report in the Irish Independent today: “Thousands of garages in the UK would have nearly new demonstration models that are sold off for less than the original price.”

The tax on some new cars in Ireland can be upwards of €5,000, so there is plenty of money to be saved if the laws eventually come to pass.

And how likely is that?

Pretty darn likely. Here’s some official-speak to explain it.

The Commission said that we breached regulations because the amount of tax levied on an imported second-hand vehicle was higher than the rate already included in the value of a similar second-hand vehicle sold in Ireland.

Still with me? Here’s a little more.

Under EU law, member states are prohibited from levying lower rates of tax on domestic products than on those from another EU country.

So, if we don’t make the necessary changes by April, the Commission warned they would refer the matter to the European Court of Justice. It’s the equivalent of a kid in the playground threatening to get their mammy on the case.

So the Government are just going to fall into line?

Do we ever put up a fight to our continental overlords? The Department of Justice have already accepted the findings of the commission, so the new laws should be in place within the next couple of months.

But surely the Government stand to lose a few quid as a result?

And how! VRT earned the Government a little less than a cool €400 million last year alone, so they can expect a fairly substantial reduction when they’re counting the pennies at the end of the year.