Funding risk for local authorities as motor tax receipts decline – Cowen

Published on: 08 August 2016

Fianna Fáil Spokesperson on Housing, Planning and Local Government Barry Cowen TD has warned that local authorities risk losing significant funding for maintaining roads and infrastructure due to a major decline in motor tax receipts.

Deputy Cowen made the comments after receiving new figures from the Department of Transport which show that motor tax receipts for have declined by €38m so far this year, or 6% compared to the same period last year.

“These new figures show that motor tax receipts could be down between €70m – €80m by the end of 2016 compared to last year. This is despite the large increase that there has been in new car sales so far this year,” said Deputy Cowen.

“New private car sales are up 24% this year. Such an increase would traditionally have been associated with a major rise in motor tax receipts. However this has not transpired due to changes in the motor tax regime since 2008, where motor tax is now based on CO2 emissions rather than engine size.

“This is the first year since 2007 where new car sales have increased significantly. New cars have lower CO2 emissions and this appears to have had a significant dampening impact on the amount of overall motor tax collected this year.

“The decline in revenues generated from motor tax is particularly worrying for local authorities. They are already struggling to maintain roads, with their spending on average amounting to only 50% of what is required to keep roads in a good condition. Some local authorities have seen revenues from motor tax decline by 15% this year alone. This could lead to roads budgets being slashed even further.

“The level of under-investment in maintaining the roads network over the last five years is irresponsible and self-defeating. By failing to keep a minimum level of maintenance investment, large scale capital costs are been piled on the shoulders of future Governments.

“We need to see a Government review of motor tax to assess the impact of the tax changes. The Government subsidy to the Local Government Fund may also have to be increased to compensate for the fall in motor tax revenue,” concluded Deputy Cowen.

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