The Government's tax revenues from road tax on new passenger cars is likely to be only €1m - or 6.5 percent up on the same period in 2009 - despite an increase in car sales of some 52 percent.
The Government's scrappage scheme has been hailed as a success by the Society of the Irish Motor Industry, but the move by motorists to cleaner cars is likely to be at the expense of Government coffers. September saw an increase in new car sales of almost 94 percent on the same period last year, but perhaps more crucially there has been a dramatic move to cars in motor tax bands A and B.
In September of this year, there was a 494 percent increase in sales of cars from Band B (with emissions of 121-140g/km), while sales of Band C cars dropped by 40 percent, Band D by 70 percent, Band E by 65 percent and Band D by 68 percent.
The same is true for the year to date. Sales of Band A cars in 2010 are 317 percent up compared to the same period in 2009. Band B cars are up 57 percent for the same period, but sales of Band C (-17 percent), Band D (-25 percent), Band E (-50 percent) and Band F (-51 percent) are all down, and without sales in these higher tax bands, revenues are suffering.
By applying the appropriate fee to each car registered we can estimate that revenue from road tax from January to September 2009 was €15,536,359, but in the same period this year, revenue from road tax based on registrations would stand at just €16,550,016, an increase of just €1,013,657. This is mainly because the majority of sales in 2010 (78.83 percent) come from the lowest tax bands with the lowest tax charges, Band A (€104 per annum) and Band B (€156 per annum).
Taking into account the fact that not all cars are taxed in January - or for an entire year - and any pre-registration of cars, and the income from road tax alone could be lower than these estimates.
According to figures from SIMI, the increase in sales of new cars has accounted for a €129 million increase in VAT and vehicle registration tax in 2010 compared to 2009.
In terms of revenue gained from VAT and VRT this year compared to last, there has been a €43m increase compared to January - September 2009, which isn't a dramatic rise: again a symptom of the move to lower emission cars ,which come with lower VRT percentages.
VAT on new car sales is up by €86m compared to the same period in 2009. In total, the Government has earned an extra €129m in VAT on VRT: €268m compared to €182m in 2009. However, VRT on imports is down in 2010. €85m was earned from VRT on imported cars this year, which is €40m less than in 2009. This almost negates the €43m increase earned from VRT on new cars.
Such a small increase in revenue from motor tax compared to 2009 - despite the increase in sales - is likely to encourage the Government to review the charges for the more popular motor tax bands in the next budget.