Budget won’t take its toll

The National Roads Authority has decided not to increase toll rates for next year.

The decision will come as a relief to drivers bracing themselves for possible increases in motoring costs in the Budget next week.

Toll rates are index-linked to inflation, and the change in inflation between August 2012 and August this year was just 0.2 per cent, which is not enough to prompt an increase in toll rates.

This is also the basis on which operators of private road tolls increase their charges, although they are not obliged to impose an increase.

If inflation falls beneath a certain threshold, toll rates can also be reduced. A spokesman for the NRA confirmed yesterday that the rate of inflation for the 12 months to August was below the level required to trigger an increase.

A spokesman for Dublin City Council, which has contracted Egis to operate the East-Link, confirmed toll rates on this route will not rise next year.

Toll rates across all routes rose by 10 cent on January 1st due to the level of inflation in 2012.

Private tolls may rise
While tolls will not increase on the M50 and the Dublin Port Tunnel, if VAT increases significantly in the Budget, this could result in tolls rising on routes operated by private consortiums. This is because private operators are obliged to charge VAT at 23 per cent on their tolls. A spokesman for the NRA said any increase would be rounded up or down to the nearest 10 cent.

The imposition of VAT on tolls charged on the M50 and the Dublin Port Tunnel is the subject of a dispute between the NRA and the Revenue Commissioners.Following a European Court of Justice ruling in 2010 that an exemption on services provided by the State constituted an unfair advantage over private operators, the Revenue instructed the NRA to start charging VAT on tolls at the M50 and the Dublin Port Tunnel.

The NRA claimed no competition issues arose because there was no rival, privately-operated motorway serving the capital.

The NRA and Department of Transport appealed the decision and the NRA has paid the VAT due – estimated at approximately €1.5 million per month or more than €40 million to date – on behalf of motorists since then.

The matter has been referred to the Revenue Appeals Commission for decision.

If the current VAT rate were imposed on the M50, the charge for a car with a toll tag could rise by 48 cent or by 71 cent for a car without an account.

Toll charges at the Dublin Port Tunnel would also increase from €10 to €12.30 during peak journey times and from €3 to €3.69 at off-peak.

Tolls suspended
Meanwhile, road tolls for hauliers using the M1, M3 and M6 motorways and the Limerick Tunnel are being suspended during
November.

The move is part of a trial by the Minister for Transport, Leo Varadkar, to see whether lower toll rates entice hauliers away from local roads and on to motorways.

The State will cover the estimated €2 million cost of the tolls foregone on the routes during what is one of the busiest months for haulage traffic in the run-up to Christmas.