The Government has been accused of maintaining “an absurd and nonsensical” attack on lower-income people who cannot afford to pay their motor tax in a lump sum once a year.

A policy which sees significantly higher charges imposed on drivers who pay their tax in instalments generates over €70 million for the exchequer each year, with the higher charges bearing little relationship to the administrative costs incurred, it has been claimed.

Motor tax can be paid on an annual, half-yearly or quarterly basis, with those who pay in two instalments charged 111 per cent of the annual payment and those paying quarterly charged 113 per cent.

In response to questions from Sinn Féin's finance spokesman Pearse Doherty, the Department of the Environment said it had raised €72 million in additional revenue from instalment payments in 2015.

Just over €16 million in extra charges were imposed on people paying every six months while €56.5 million was raised from quarterly discs.

“We are talking about a process that is almost entirely automated. Applications are made and processed online and the disc is then mailed out, yet the higher costs associated with the tax when paid in two or four instalments instead of one are at the same level as they were 50 years ago,” Mr Doherty said.

No logic

“To argue that there is the same level of cost now as there was in the 1960s, when a huge level of manual intervention was needed, is absurd and nonsensical,” he said. “It is simply an attack on poorer people who are not in a position to pay the tax in a single lump sum.”

Mr Doherty pointed out that there was no logic to the current charging regime and asked how it could cost 11 per cent more to send out two tax discs a year instead of one.

The average annual motor tax in the Republic is about €500, which means those who pay the bill in instalments pay as much as €65 more than those who pay up-front.

The Department of the Environment defended its charging policy, saying the differential took account of the extra workload for staff in motor tax offices although the spokesman also confirmed that almost 70 per cent of applications were now processed online.

He said the “loss of income that would arise from changing these arrangements would have to be borne elsewhere”.