As stated on numerous occasions, this legislation will close the loophole in our motor taxation system that is costing the taxpayer in excess of €50 million per annum. It will ensure a more fair and transparent system for road users.
The evidence that we have been privy to on this issue demonstrates very clearly that there is a widespread problem with false off-the-road declarations being made by car owners in order to avoid paying motor tax. It is that simple. I welcome any Bill that identifies and targets a gap that allows abuse at the expense of the vast majority of taxpayers. The forthcoming declaration system for cars that are off the road for genuine purposes will put a stop to false declarations and should be welcomed by all tax-complaint individuals as a means of safeguarding tax revenue in a clear and transparent manner.
The local government efficiency review group estimated in 2010 that the Exchequer loses €75 million per year as a direct result of motor tax evasion and particularly the abuse of the off-the-road system. Half a million cars were off the road in 2012. Only 20%, however, of these cases involved a change of ownership, which leaves a particularly high number of cars that are exempt or off the road for unidentifiable reasons. For the purpose of taxation, this is not good enough. The taxpayer is entitled to a much higher rate of vigilance and a much higher standard, particularly when we ask so many to contribute more in these straitened times.
According to various studies that have taken place since 2001, there seems to be a consistent rate of non-compliance of 5%. This statistic is from one of the most recent roadside studies I have been able to find. Since 2001, there have been more modern means of measuring tax compliance, which I very much welcome. These include the scanning of vehicles on toll roads, which revealed a rate of compliance of 7% in 2010. When adjusted, this resulted in the aforementioned rate of 5%. I am taking into account that motor tax accounts for almost €1 billion in revenue. A 5% rate of tax evasion is a serious indictment of the previous Government and its waste over so many years. We have now taken responsibility for the running of this State. This legislation will deal with the loophole I outlined.
If we are to reform our motor tax system and close gaping loopholes, we cannot bury our head in the sand and ignore the enforcement issue. Despite An Garda Síochána having the best will in the world, it is just unrealistic to suggest that we have sufficient manpower or resources to deliver maximum compliance in this area. This legislation creates an opportunity for us to really consider and debate the modernisation of how we enforce legislation in general. We have the technology and database to transform radically how we monitor and enforce the motor tax system. We need to examine technology available to us in our daily lives in order to succeed while also reducing pressure on our front-line services, such as that of An Garda. I acknowledge the Department’s success to date in establishing its online payments system, and I welcome its recent initiative to invoice users electronically. These are good measures that allow for easier payments, easier communication and, crucially, they lower the costs of printing, posting and manpower to process payments, for example.
In regard to enforcement, it is best practice to look to our neighbours in the United Kingdom who introduced similar legislation about three years ago. They have established a system based on enforcement whereby all registered vehicles are recorded online. Tax renewal status is displayed. This would be very useful in Ireland. This is a simple and most efficient way of identifying tax evaders. Users who have not paid to date and have not declared their vehicles to be off the road may be pursued appropriately by desk officials rather than relying on Garda resources.
Why should we stop with motor tax? We have technology to hand to implement what is proposed across all legislation surrounding vehicle laws, including in respect of NCT compliance and even insurance. Pretty much every smartphone on the market has a barcode reader or scanner which allows one to scan the tax information in a car window to produce up-to-date information as to its tax status and NCT status, and even insurance status given the information-sharing arrangement the State now has with the insurance companies.