Cantillon: emission scandal highlights faulty basis of motor tax

The Government is taking in a tidy sum on the back of booming new car sales. Yet the environmentally-friendly gloss of our emissions-based registration tax and annual motor tax regimes seems to be peeling away.

The emissions cheating scandal, which for months has tarnished Volkswagen brands, has now sullied several other marques, most recently Opel.

Last week Der Spiegel magazine said tests it carried out on the Opel Astra and Zafira models showed they emitted about 11-times the legal limit of noxious nitrogen-oxide.

At the heart of these claims is that engineers – rogue or otherwise – created ways to game the testing regimes, recording lower emissions than was really the case.

There are two simple truths from all this: the industry is not above gaming tests or regulations; and the testing regime is not fit for purpose. What is more, recently-proposed changes to the tests aren’t going to remedy the situation.

Not that we are in a strong position to complain – we don't carry out any of our own regulatory testing in Ireland. Instead we rely on test centres in Britain or the continent, working in conjunction with the car firms, to provide us with official results for new vehicles on the market. And it is on these lab results we have built our motor tax regime.

The reality, of course, is that lab-based results are never going to reflect reality on the road. These figures merely offer a proportional indicator as to how one vehicle compares with another. The problem is that consumers – and government policymakers – seem to take these lab results at face value. The end result is a farce.

When we moved to a tax system based on CO2 emissions for cars registered after 2008, consumers abandoned higher-rated petrol models in favour of diesels. For many low-mileage consumers the move was simply wrong. They paid a premium on the new car price, faced higher servicing costs, and have struggled to recoup the benefits from lower fuel costs. We also ignored warnings about diesels emitting far higher levels of carcinogenic nitrogen oxide.

Overhauling the testing regime could well mean major changes to our motor tax system and in turn another upheaval in the new-car market.

That’s not something Revenue officials or motor industry folks will relish.