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This writer has tried to articulate that the best way to understand modern Ireland, is to see how Communist countries were historically run, and you will find that to be the best analogy for what happens now on the island. Opposed to that concept, many people will claim that we are a free market, non state dominated, economy. But possibly a look at the tax take, never mind the huge regulations, might tend to dent that comforting assumption. An example of the humble motor car is used here to test this theory.
Purchase Price
Alongwith the purchase of almost everything else, the cost of buying a car in Ireland can attract some serious taxes. But this is especially true now because of some new ones that apply for importation from the UK and which came in around the time of Brexit. These taxes can be quite difficult to calculate exactly, but the Revenue Commissioners give a sample VRT figure (one of these taxes) for a 2015 1.9 litre hatchback diesel car on their website, and since on the huge autotrader.co.uk website it lists only one type of car with that specification, an MG MG6, then presumably the Revenue figures will apply to that exact make of car.(1) Hence you can buy this car in the UK right now for £2,800 (€3,257) (2) and the overall tax appears to be:
– Customs Duty of 10% of invoice price (3): €326
– then you add that figure to the car plus the cost of importation (c.€400) and insurance (maybe €200) and then you pay VAT of 23% on this consolidated figure (€4,183) (4): €962
– and then add on the VRT sample figure on this type of car, again as stated on the Revenue Commissioners website, including NOX and CO2,: €6,952.
That gives you a tax bill of €8,240 for a car that costs €3,257, a tax rate of 253%.
That might be an extreme example, because its the importation of a vehicle from the UK and an older diesel model which attracts higher NOX and CO2 taxes, but charges of this type are not that uncommon now. Since Ireland has no domestic car manufacturing industry all cars are imported at some point, and hence attract the heavy Value Added Tax (about 23% of the manufacturers/sellers asking price) and hefty Vehicle Registration Tax (traditionally about 24% of what Revenue consider the price should be, after the VAT has been added in, a kind of tax on tax). Also older diesels are frequently the only type of car a poorer person in a rural area can drive, because they tend to be much better on miles per gallon, a very important consideration for such a driver. Some of the massive taxes in the above example are only if importing from the UK, but that is traditionally very common in Ireland, much much moreso than from the EU because of course the UK has left hand drive cars, like Ireland but unlike the rest of Europe.
Also the above is not for some luxury car, its a practical car for maybe a poorer person, the figures on tax can get a lot worse if you were in the market for the former. For example you can buy in Ireland right now a 2000 Jaguar S-type for €1,900, but your annual tax bill on it will be €1,494, 79% tax to be paid every year. The overall tax bill over the life of a car like that must be astronomical when you add on the VAT and VRT when it was purchased new.(5) It is quite normal in Ireland for a secondhand car that cost say €1,400 attracting an annual car tax bill of about €700, obviously 50% or so.
Albeit I am referring here to the extreme end, but if you have purchase taxes of 253% and annual taxes of 79%, on such a standard necessary item as a car, then why are people so shy of calling this a Communist state?
Fuel
Meanwhile the tax take on a litre of petrol in Ireland now is estimated at 56%, consisting of VAT, Excise, Carbon Tax, and the National Oil Reserves Agency (Nora) and Better Energy levies.(6) This tax percentage is actually reasonably low by Irish standards, because most of the tax is the Excise which does not fluctuate with the price of fuel. Since the overall fuel price is exceptionally high right now, it means, bizarrely, that the tax as a percentage is therefore less, historically it would be the mid or late 60s, or even 70, per cent.
But in Ireland now, as part of an EU regulation, there is a special windfall tax on energy companies. They now pay 75% extra tax on any profits over 20% of their historic profits over the last three years.(7) This tax seems to be the highest in Europe, going by this quote from a European wide survey of these taxes:
So when you see the oil companies gaining by the higher petrol price at the pump (which is very true right now), then they are paying 75% tax on that extra gain.
Hence if you really wanted to add up the true tax take from the motorist paying for fuel in Ireland, you have that 56%, added to 75% tax on whatever is the excess been paid to the oil producers because of the high oil price, plus rates, payroll and corporate taxes on the (small) percentage left to the forecourt owners, and of course also paid by the oil companies for their businesses in Ireland, and you begin to wonder if about 90% could be the true figure for taxes on car fuel in Ireland?
With those kind of figures on a core essential component of Irish family and economic life, again I ask, why shy away from calling Ireland a Communist country?
by Brian Nugent, www.orwellianireland.com
Footnotes
1. https://www.revenue.ie/en/vrt/calculating-vrt/calculating-nox-charge.aspx, and remember this is just a reasonable assumption, the exact make of car is not listed here. Their other VRT calculator does not list a diesel 2015 MG6.
2. https://www.autotrader.co.uk/car-details/202407121710636 .
3. See https://www.boards.ie/discussion/2058056834/importing-from-the-uk-definitive-guide-q-and-a/p129 .
4. The calculation here is also complicated, but in practice will work out at something like this, whether paid to either the UK or Irish government, and hopefully not both!
5. https://www.donedeal.ie/cars-for-sale/jaguar-s-type-3-0-v6-exe-auto-clean-car-nice-d/37495714 .
6. https://www.theaa.ie/motoring-advice/fuel-prices/ .
7. https://www.lawsociety.ie/gazette/t.../law-on-energy-windfall-tax-comes-into-effect .
8. https://taxfoundation.org/data/all/eu/windfall-tax-europe-2023/ .
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