At the European Parliament yesterday MEPs voted to begin the abolition of Vehicle Registration Tax (VRT) and move to a system of car taxation based on pollution levels. While 385 voted in favour compared to 139 against and 109 abstentions, it is only an advisory move as individual member states have control over their own finances and taxation.
The majority of Irish MEPs voted against the policy, although Labour's Dublin MEP Proinsias de Rossa and Independents Marian Harkin and Kathy Sinnott favoured the move.
Europe's Green MEPs also opposed it on the grounds that VRT should be maintained to discourage the purchase of cars.
EU Finance and Excise Commissioner Laszlo Kovacs made the proposal which aims to end VRT by 2016 and insisted that it would "not require member states to introduce any new passenger car-related taxes and it would not harmonise tax rates".
Ms Harkin said "the thrust of the proposal would improve the functioning of the single market and crucially would greatly assist in our goal of reducing carbon dioxide emissions, without compromising the ability of any country to levy its own taxes".
Ireland had one of the highest rates of VRT in Europe with almost 10 per cent of the total tax take coming from motorists.
Ms Sinnott said that the way Ireland levied VRT turned it into a draconian tax that had "no rationale except to bleed Irish car owners of money, a lot of money from citizens who for the most part do not have a public transport system that will allow them to manage without a car".
Fine Gael MEP Gay Mitchell agreed that there should be an EU policy on carbon emissions and "if someone chooses to drive a four-litre car then they should pay a higher penalty than someone who drives a smaller car", but VRT was too important to the Exchequer.
Fianna Fail's Brian Crowley said that if VRT was removed it would mean an increase from €400 to €900 on their annual motor tax or a 2 per cent increase in personal income tax.