The Irish motor industry has given a cautious welcome to the news that the European Commission is considering the abolition of car registration taxes and other fees that it believes distort the bloc's single market.
"The general gist of the proposal . . . is that those taxes not environment-related, like the vehicle registration tax, should be transformed and replaced with road taxes and fuel taxes," European Commission spokesman Mr Tilman Lueder told a news briefing today.
He said the EU executive would consult on the plan with governments, companies and other institutions until September 10th and then propose legislation. It would have to be approved in negotiations between governments and the European Parliament.
The registration tax and other fees vary across the 25-nation EU, resulting in different car costs and stifling the free movement of goods - one of the bloc's principal rules.
Mr Lueder said that as an interim solution, before the registration tax is scrapped, the Commission would propose a system to refund the levy if an owner moves with his car to another EU country.
Separately, the Commission said it might launch a inquiry into the excise tax Poland levies on second-hand cars brought from abroad.
The Polish government imposed the tax to protect local car makers by curbing big imports of used cars, but analysts say the regulation breaches EU law because the EU newcomer country does not levy the tax on second-hand cars bought in Poland.
Mr Cyril McHugh, chief executive of the Society of the Irish Motor Industry (SIMI), gave a cautious welcome to the news, but said there was nothing new in the proposal. A paper had been produced two years ago, but the proposal was "kicked out" by EU finance ministers.
Mr McHugh said people should not get their expectations up too high about the abolition of the car tax, which adds enormously to the cost of buying vehicles in Ireland. He said it could be argued that the tax should be abolished altogether, without being replaced by a different system of taxation on motorists.
Motorists here paid 13 per cent of all taxation so far this year, Mr McHugh claimed. He said SIMI agreed with the Commission that the vehicle registration tax completely distorted the principles of the common market, given that some countries do not charge it.
He said the public is being invited by the Commission to make submissions on the matter and the SIMI would place a link to the relevant website on its own site next week.