The Society of the Irish Motor Industry(SIMI) is lobbying TDs in all constituencies in an attempt to exact changes in the Finance Bill 2003, which introduced PRSI on company cars.
The new Benefit-in-Kind (BIK) charges that will come into effect on January 1st will result in employees having to pay 5 per cent PRSI on 30 per cent of the value of a company car, with employers paying 10.75 per cent.
According to Keith Butler, SIMI's industrial relations executive, with only a little over two weeks until the budget for 2004 is announced, meetings with TDs and SIMI members around the state are almost completed and there has been what he described as "generally positive feedback", from the majority of politicians to date.
Butler says that while the SIMI does not expect - or is even looking for - a complete turnaround on the new charges, he says the motor industry lobby is hoping that a VAT input credit will be applied in this year's budget.
Currently VAT revenue from cars is estimated to be in the region of €126 million, but with a VAT credit scheme similar to that in operation in Britain, companies would be able to claim back nearly 50 per cent of that VAT.
Overall, at a rough estimate, this would be worth close to €60 million to the industry here, which would go a long way to staving-off the most adverse effects of the BIK charges, according to Butler.
Under the new rules, company drivers in the 1.5-litre to 1.9-litre bracket will be hit hardest, while drivers who travel more than 15,000 work-related miles per year will benefit from a reduced BIK levy on a sliding scale from 30 per cent to 6 per cent.
A driver who travels less than 15,000 miles a year will be taxed on 30 per cent of the vehicle's open market value, while someone who drives over 30,000 miles a year will be taxed on a sliding scale dropping to 6 per cent for heavy users.
An employee, for example, who travels less than 15,000 miles in a company car worth €30,000 will be liable to pay the current 6 per cent rate of PRSI on 30 per cent of the car's value - €10,000 in this case - as well as the PRSI already paid on salary.
The cut-off limit for employee PRSI is €40,420, after which no PRSI is paid.
The logic behind SIMI's campaign is that when the new charges come into force it could have the effect of reducing the number of company cars sold in Ireland - estimated at between 35,000 and 40,000 annually - and, consequently, the Revenue's VRT take will be adversely effected too. By SIMI estimates this is in the region of €296 million annually.
It could also, Butler adds, push many employees into the second-hand car market which would also have adverse effects on revenue.