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Swappage scheme could generate €129 million for Exchequer, says motor industry

The scheme would see a €2,000 reduction in VRT on the purchase of a new car where the trade-in is a 2008 car or older.

Car dealership
Car dealership

THE SOCIETY OF the Irish Motor Industry (SIMI) has said that a swappage scheme would give a much needed boost to the motor industry.

They propose that a €2,000 reduction in VRT on the purchase of a new car where the trade-in is a 2008 car or older would create 2,200 jobs and generate €129 million for the Exchequer.

Alan Nolan, SIMI Director General said:

Similar to scrappage but much more beneficial to the Exchequer, swappage has the potential to deliver an even greater benefit but at no greater risk to tax revenues, the Industry or the state.

In their proposal for Budget 2014, SIMI estimates that 17,000 cars would be sold through the scheme and that it would save 11,500 tonnes of CO2 emissions per year.

New car sales

Since the downturn, car sales have fallen dramatically. According to the SIMI, in 2007, €2 billion in tax was generated from the sale of 186,000 new cars.

This has fallen by €1.4 billion and this year, less than €600 million will be collected from just 73,000 new cars.

SIMI state that since 2007, 12,800 jobs have been lost in the motor industry, while over the past five years, 150 garages have closed.  New car sales have been down by 57 per cent for 5 years.

No cost

They also argue that a swappage scheme will not need resources from any other projects and would be self-financing and at no cost to the Exchequer. “It would deliver an immediate and significant increase in tax revenues,” they add.

Paul Linders, SIMI President said that the motor industry is facing a “fundamental structural problem, where traditional new car buyers are left out of the market due to the cost to change gap”. He added:

We need action now and if no incentive is introduced, we’ll see many more dealers go out of businesses and the local employment they provide will be gone.

Swappage would cost the state nothing, new jobs would be created, the Exchequer would gain significant extra revenue and we have a chance of returning to more normal levels of business when consumer confidence and normal economic growth levels return.”

Read: New ’132′ reg system drives huge increase in August car sales>

Read: ’131′ plates don’t seem to be working as new car sales down 11.2% in May>

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