VLAI Calls on Government to Work Jointly To Put Motor Industry Back On The Road
A temporary reduction in VAT to 15%, a number plate system that recognises a vehicle’s place of first registration, and a change to VRT rules for imported vehicles are among the proposals that the Vehicle Leasing Association of Ireland (VLAI) has recommended that the Government implement in the forthcoming 2009 ‘Mini’ Budget.
In a letter to Minister for Finance Brian Lenhihan T.D., John Wallace, President of the VLAI called on the Minister to recognise the extreme plight facing the motor industry at present. With over 4,456 jobs lost and 9 dealership having gone into receivership since the start of 2009, he warned that the continuing growth in the used import market is putting thousands of further jobs at risk. He encouraged the Government to engage with the automotive industry to jointly work to protect employment, and to develop strategies to prevent tax avoidance and increase exchequer income.
The VLAI also highlighted the severe fall in VRT income as a result of the combined impact of plummeting new cars sales, and the change to the CO2 based VRT system introduced in July 2008. With car registrations and commercial vehicle registrations down 66% and 81% respectively year to date, VRT income fell 85% from €215m in January 2008 to €32m in January 2009.
Many of the eight proposals put forward by the VLAI are targeted at discouraging the importation of cars from abroad. These include charging VRT on imports at the same rate as that which would have applied had the vehicle been first registered in Ireland when new, requiring all imports to immediately undergo an NCT test and to have a metric speedometer prior to registration, and to implement legislation to ensure all vehicles are treated equally and that laws and penalties (including fines and confiscation) on non-compliant foreign registered vehicles are enforced. Additionally the VLAI is calling on the Government to put in place a number plate system which recognises a vehicle’s place of first registration, e.g. a car imported from the UK would carry a registration 07 UK 1234.
Other recommendations include a temporary reduction in VAT on cars to 15%, to increase the 20% VAT input on company cars to 50%, and to encourage financial institutions to open up credit lines to consumers and businesses.
Recognising that the current VRT system is not revenue neutral as promised by the Government when launched and therefore likely to be revised, the VLAI called on the Government to put in place a transparent and consistent methodology for recalculating VRT bands, and to announce any alignments at least 4-5 months before the New Year to allow manufacturers to plan for pricing and vehicle orders.