Drivers who pay motor tax by instalment spent almost €106m extra in past three years

Seán McCárthaigh

Drivers who pay their annual motor tax in instalments have paid almost €106 million more to the Government over the past three years than if they paid a single annual fee, according to official figures from the Department of Transport.

The findings have led to calls from Social Democrats TD Aidan Farrelly on the Minister for Transport, Darragh O’Brien, to abolish higher charges imposed on motorists who pay their motor tax in three- or six-monthly instalments.

Official figures show the Government received over €35 million extra in revenue each year between 2022 and 2024 as a result of higher overall charges imposed on individuals who do not pay their motor tax with one annual payment.

Regulations governing motor tax rates allow for motorists who pay four three-monthly instalments per year to be surcharged 13 per cent above the standard annual rate.

Drivers who pay their motor tax with two six-monthly instalments can be surcharged 11 per cent over the standard annual rate.

Last year, motorists paying by quarterly instalments paid over €22.7 million above the standard annual rate, while those who paid motor tax in six-monthly instalments paid an extra €12.4 million.

In reply to a parliamentary question from Mr Farrelly, the minister said the extra charges permissible for individuals who pay their motor tax by instalment takes account of “the extra workload” for staff in motor tax offices and those who operate the online motor tax facility as well as the additional costs associated with processing the printing and posting of additional motor tax discs and renewal notices.

“Each quarterly renewal of motor tax follows the same administrative procedures as the annual renewal process. Consequently, renewing on a quarterly basis generates four times the workload of an annual renewal for the equivalent period,” said Mr O’Brien.

He added: “The loss of income from equalising rates for these options would have a negative impact on motor tax revenue and would have to be borne elsewhere in the motor tax system or in the taxation system generally.”

The minister said any proposed change would have to be considered as part of budgetary preparations.

However, Mr Farrelly urged Mr O’Brien to consider equalising the payment options for motor tax.

The Kildare North TD said revised legislation currently being drafted should include measures “to end the penalisation of those who decide to meet motor tax liability by way of instalment payments.”

“There are many reasons a person may not have the full fee upfront and they should not have to pay more for a public service as a result,” said Mr Farrelly.