Despite the promises, when it comes to cars there's no such thing as a single EU market. Andrew Hamilton examines the reasons why we pay so much for our cars
Vehicle Registration Tax! Please try to remember those three not-so-little words if you are an Irish motorist and aggrieved by the tax burden on your car. VRT has been in place now for the best part of 10 years, replacing import duties which were abolished when Ireland entered what is so erroneously called "the single market". Of course, there's no single market if you are an Irish motorist and you want to shop around for your new car, in Britain or Belgium or wherever. The iniquitous VRT sees to that because it replaces almost exactly the old import duty tax.
But back to our core point. The politicians and their canvassing troops will soon came knocking, looking for your vote. That's when mention of VRT, followed by anger and indignation, are necessary. VRT means simply that we have the highest new car prices in the Euro zone.
Within the EU, Denmark is the most expensive but at least the Danes have a splendid transport infrastructure, a model of Scandinavian efficiency. They pay more and get a lot more. We pay more and get a lot less.
In case you, the motorist, have been out of touch, let's reiterate the nasty state-of-play when it comes to Euro car pricing for the unfortunate Irish customer. Take a 1.8 litre family car of the Mondeo, Vectra or Primera breed. With a list ex-works price of €24,700, you will be paying €9,390 to the Irish Exchequer through not just VRT but VAT as well.
That tax element represents around 38 per cent of the total price. In Britain, the tax take is 17.5 per cent, while in Germany is 16 per cent, France 19.6 per cent and Italy 19.9 per cent. For the Danes by the way, it's almost 180 per cent.
For a smaller car such as a 1.2 litre Fiat Punto, the tax man is only a little more lenient, taking 36 per cent or €4,350 in a car that's priced at €12,100 ex-works. Predictably, bigger and more luxurious cars attract higher taxation. Buyers of the entry-level S Class Mercedes-Benz at €87,500 give 42 per cent to the tax man. VRT becomes more punitive once the 2.0 litre threshold is crossed, another unfair anomaly because highly fuel efficient diesel cars with engines of 2.2 litre capacity are not rewarded for their frugality.
The real rub is that none of us can do anything about these prices, ironic really when the EU is making moves to harmonise the whole car pricing scenario. Pre-tax prices vary widely across the EU: Ireland is in a half way position in this league. Britain is one of the highest pre-tax countries and there was actually a consumer outcry there which did have the effect of getting reductions.
Why not a consumer outcry here about our after-tax situation? In the first heady days of January, when the euro was a novelty, tables were printed in the media showing that we paid more for most shopping basket items, compared with our euro neighbours. Potatoes were a prime example.
The Minister for Consumer Affairs, Mr Kitt, promised an investigation to find out the culprits.
When it comes to new cars, the culprit is easily identifiable; it's government, taking about €750 million last year in VRT which we simply should not be paying. Sadly, Irish motorists have been notoriously lethargic when it comes to protesting about car taxation.
The euro has certainly given us a greater awareness that our lot is not a happy one. VRT, then, as an election issue is what we need. The new managing director of Fiat Auto Ireland, Michael Howe, is pushing that case strongly. He wants VRT totally abolished. Not all his colleagues in the Irish motor industry favour abolition, merely a reduction to stimulate sales.
Things could get worse because there's now talk that Irish new car pre-tax prices will go up, at the behest of the makers, who are being forced by the EU to liberalise their retailing arrangements with dealers. The EU believes that dealers should offer a whole range of competitive brands just as any supermarket does.
VRT, by the way, was looked at by the politicians of Leinster House, those who comprise the Joint Oireachtas Committee on Secondary Legislation: it sees how we blend in with the diktats that emanate from Brussels.
Their judgement was that it didn't fit into the European free trade scheme of things, and that it should be progressively reduced. At the time VRT was taking over from import duty, the Minister for Finance of the day justified the replacement taxation simply by saying we couldn't afford the loss of revenue.
On the European ideal of free trade, we - or the Government - are a bit à la carte, picking and choosing what we like and don't like. Irish motorists, faced with a shambolic infrastructure that looks like getting worse before it gets better, should say forcefully that they don't like VRT and that it's against the spirit of European free trade.
Please ask the politicians and their canvassers in the forthcoming election, what they are going to do about it.