Dan Boyleof the Green Party and Cyril McHughof the Society of the Irish Motor Industry (SIMI)debate the topic.
YES: Dan Boylesays the tax system should recognise that larger cars cause more environmental damage.
Maybe being taxed off the road is too bald a statement, but if the question can be interpreted as whether fewer "big cars" should be on the road; whether such vehicles should be making fewer journeys; and whether using the tax system is one of the methods used to bring this about; then the answer should be "yes".
Climate change is the most serious issue currently facing the planet. Being able to deal with the threats posed by ever-growing greenhouse gas emissions requires individuals, particularly those of us living in wealthy societies, to act and to live differently. The impact of unsustainable transport practices on climate change is a nettle that has to be grasped. Between 1990 and 2004, Irish greenhouse gas emissions arising from transport grew by a staggering 140 per cent, making us the second-worst offender in Europe in this regard. The nettle analogy is not the simple cliché it often appears to be. In order to make the changes we need to make, those changes will result in a sting.
We know, as a rule, that larger cars invariably bring about a greater negative impact on the environment. A progressive motor tax should recognise this salient fact. Not only should environmental factors be taken into account, but larger cars take up more road space. By virtue of their size and weight they are more responsible for the degradation of road surfaces, and that represents a greater proportion of the maintenance costs that result.
Of course, our current system of annual motor tax is far from ideal. What the Minister for the Environment, John Gormley, has suggested, but not yet proposed in detail, is the application of a long-held Green principle. Despite what has been reported, no figure has yet been identified as to what constitutes a "large car". The figure of 1.6 litre engine capacity certainly hasn't been mentioned by the Minister. What he has mentioned is that the current system of motor taxation, until replaced in the very near future, should be changed so that the owners of large cars, which his department will soon define, will pay more.
A sustainable system of motor tax would pay greater attention to fuel efficiency and, in particular, to minimising carbon emissions. These are the new components that will - and must - be factored in to a new system of motor taxation. The Green Party's policy, which is not, alas, part of the Programme for Government, seeks to go even further in reforming the system. The most equitable form of motor taxation is one that is linked to usage. However, such a tax would need to be considered very carefully. If applied directly it could have inflationary consequences. This is why we proposed that a levy on fuel be phased in over a 10-year period, increasing the price of petrol while reducing and eventually eliminating the current flat-rate, banded system.
There's no doubt that the current system discriminates against many of our citizens, among them people who use their cars while conducting a business, people living in rural communities and people with large families. Of course, the unacceptably poor network of public transport throughout this country still means that a stringent system of motor taxes is unfair to all citizens who require privately-owned transport to meet a need not being properly addressed by the State. This is why real reform of motor taxation needs to happen. Climate change requires those reforms to begin right away.
Being aware of these constraints, the short-term changes being suggested by Minister Gormley may - and probably should - be accompanied by compensatory measures. I would be confident that the Minister would bear this in mind.
We have moved a long way from Henry Ford's sales pitch of people being able to buy any car they wanted, as long as it was black. There are a great many factors that now influence people's decisions to purchase one model of car over another: style, power, comfort level, and the status that owning a particular car might confer. But new car purchasers must now treat environmental concerns as a major factor in their purchasing decision.
More targeted and more stringent motor taxation is far from the only - or even the most important - instrument in counteracting the effects of transport on carbon emissions. The most effective changes can be made as a result of individual lifestyle changes. We need to change the type of mindset that sees thousands of children being taken to school by car, over short distances, out of a justifiable fear that the roads are too dangerous to walk near or across.
These are the arguments. I am happy to have made them and to have referred only once to SUVs.
Senator Dan Boyle is the Chair of Green Party and is also the party spokesman on finance
NO: Cyril McHughsays that if the price of new lower emissions cars gets too high, customers will resort to importing older, more polluting ones.
Putting even higher taxation on bigger cars, including SUVs, is counter-productive in that the result will be an increase in CO2 emissions, not the reduction in such emissions that, presumably, is at the heart of this debate.
Climate change is a key concern to all of us, and car manufacturers are investing billions of euro per annum on research to reduce the impact of emissions on the environment. This research has and will continue to pay off, the net result being that, as regards non-CO2 emissions, the problem is solved in new cars, and reductions of 13 per cent in CO2 emissions have been achieved over the past decade. Incentivising the replacement of older vehicles with newer ones, as Sweden is currently doing, is the best way to gain the benefits of these significant reductions.
In Ireland the Environmental Protection Agency (EPA) has calculated that passenger car CO2 emissions have risen by 140 per cent since 1990. However, their estimate is based on fuel sales. In 1990 fuel was cheaper in the North, so people bought fuel there; so the EPA's 1990 estimate is underestimated. Now, with cheaper fuel in the South, the traffic is the other way and the current EPA estimate is significantly overvalued. The actual increase, as measured by Goodbody Economic Consultants, using an EU data system, is 90 per cent. This is not out of line with economic growth or the increase in numbers at work in that period.
Man-made CO2 emissions account for a mere 3.5 per cent of total CO2, the balance occurring naturally, mainly from the oceans. Of the 3.5 per cent man-made emissions, passenger cars are responsible for 12 per cent. In 2006, passenger SUVs comprised just 8.5 per cent of all passenger car sales in Ireland. So the impact on the environment of reducing SUV sales is negligible.
The campaign against SUVs originated in the US, where over 50 per cent of sales are SUVs and where engines are three to four times bigger than those sold in Europe. SUVs in the US generally have six- to seven-litre engines, whereas 50 per cent of SUVs sold in Ireland are less than 2 litres.
Over 66 per cent of SUVs here have diesel engines. These have lower CO2 emissions than equivalent petrol engines, so the American term "gas guzzler" cannot be applied to those in the Irish market.
Our experience is that the vast majority of SUVs sold in Ireland are serving small business, combined with family purposes. The other option is to have two vehicles - a business one and a family one; not an environmentally friendly solution.
Certainly there are SUV owners who have made a lifestyle choice, but through vehicle registration tax (VRT) of 56 per cent of the pre-tax price of the vehicle and 21 per cent VAT, they are already paying a heavy price for their choice.
The final two points that I want to make are probably the most crucial to this debate. Firstly, it is legally impossible to separate what are known generally as SUVs from other cars of the same engine size or emission output. The net result being that to "get at" the very small number of people who some judge to be driving SUVs without good reason, you have to trap others who have justifiable reasons for driving bigger cars, eg families with three children requiring child seats.
Finally, statistics show that the higher rate of VRT, the greater is the incentive to import bigger, older, polluting cars and SUVs. Twenty per cent of all new car sales are over 1.9 litres, compared to over 35 per cent of used imports, the average age of which is six years. Not only do these used imports not have the latest environmentally friendly technology, but with wear and tear their emissions are higher still. They are also half-life vehicles that have to be disposed of in Ireland. In addition, the European Court has ruled that, even if a higher tax was applied to new vehicles, it could not apply to those previously registered elsewhere in Europe. (This also applies to changes in road tax).
Push the price of new, lower-emissions cars out of range of customers and they will resort to importing older, more polluting ones. The net effect will be an increase in emissions. Sweden has abandoned high ownership taxes, introduced a scrappage scheme and brought in tax and parking incentives for hybrid and biofuel vehicles; and 20 per cent of new cars sold in Sweden in the past year were low-emission cars. We should learn from them: incentivise and you will encourage customers to make more environmentally friendly choices; penalise and not only will the environment suffer, but so too will government revenues and employment in the motor business. This budget presents a great opportunity to make a real difference. Don't waste it simply to fulfil a grudge.
Cyril McHugh is chief executive of the Society of the Irish Motor Industry