Mr President, I come to this debate with divided loyalties. On the one hand, there is no doubt that simplifying the existing vehicle tax system to remove obstacles and distortions to the free circulation of passenger cars within the internal market is long overdue. In fact, the prospect of a free market in cars was one of the most talked-about issues dangled tantalisingly in front of our citizens as we embarked on the single market – in Ireland, in any case. My country is one of the ten member states with a vehicle registration tax. It is a very high one: I think Finland may beat us but we are certainly up there with them. This keeps the prices of passenger cars and all road vehicles amongst the most expensive in the EU, including imports of used cars. We have no indigenous car manufacturing plants, not even assembly plants. Our cars are all imported, contributing nothing to employment and adversely affecting our balance of payments. Our road network, notwithstanding Structural Fund generosity over the years, is creaking at the seams and our main towns and cities are gridlocked as our car population has increased dramatically in the last decade or so, and the graph continues relentlessly upwards. In fact, the price of bullocks and the number of new car sales, in no particular order, have long been yardsticks of economic performance in Ireland. Add to this the fact that our Kyoto CO2 emissions are now at 1990 levels plus 22% – already 10% over target for 2010, and the fact that there will be little or no decrease in car prices even if there is a removal or reduction in VRT because car manufacturers have had to reduce their prices to offset our high tax regime - and they will revert their prices if the tax burden is lightened - and you have altogether a very complicated field of play. On the other hand, the Irish Exchequer obtains over EUR 800 million annually from VRT, this equates to a 2% increase in the standard rate of income tax and indicates the problems that would ensue if VRT were to be reduced or abolished. If it were to be replaced by additional petrol taxes, an increase of 36 cents per litre would be necessary to make up the difference in tax take. This would be inflationary, as would any commensurate increase in our already high annual circulation tax, resulting in car owners who had already paid VRT on existing vehicles being hit by a double whammy. While I object to paying such high rates of VRT in a so-called single market, I recognise that VRT is a once-off tax capitalised in the value of cars. There is no evidence that the problems with it, such as they are, would warrant a large intrusion into the domestic tax arrangements as contemplated by this Commission communication. While I can distinguish between indirect taxes such as VRT and direct taxes such as income and corporation tax, Member States are entitled to order their affairs so that motorists contribute to the cost of providing public services, especially to the cost of road and rail construction and the maintenance of our roads. Far better that than to increase income tax by 2%. Commission involvement in Member States' tax arrangements must come with a serious health warning. An ongoing flirtation in this sensitive area is a serious threat to the continued acceptance of the great European project by an increasingly Eurosceptic citizenship. I should like to point out to the Commissioner that he meddles in the tax affairs of Member States at his peril. In conclusion, the future for our single market must lie in a car taxation system which is visibly CO2 modulated, but without central prescription. The rate of this tax should fully reflect each Member State's requirements – environmental, economic and physical. We will not truly have a single market in the area of passenger cars and road vehicles until we all start driving on the same side of the road so that we can all have either left-hand or right-hand drive cars. But that is a detail for another day.

Political group: PPE-DE