Car Scrappage Scheme: A Nice Little Stimulus...for Germany and Japan

Tom McDonnell: The much maligned car scrappage scheme comes to an end tomorrow. Unsurprisingly the car 'industry' proclaims it a success.

The scheme was a nice little stimulus for...Germany and Japan.

Another example of hairbrained policy making and wasted money. Ireland does not make cars and most of the money from these sales goes to overseas manufacturers in countries like Germany and Japan. It is hard to imagine a stimulus with a higher rate of leakage. Spending money on imports simply boosts jobs in other countries while channeling spending away from the domestic economy.

If the Government insists on handing out the gift of tax breaks (meaning money lost somewhere else in the economy) to specific types of retail businesses in the future it would be prudent to at least target those goods and services that are made in Ireland.

Paddy Logue over at the Irish Times has a good take on it:
"It used Government money to discount new cars for people who already have access to money or credit while getting them to junk a perfectly good car and then buy a new one whose production no doubt caused another small rise global warming."

And Friends of the Earth point out:
"each new car represents two to three years of pollution before it even hits the road"

Lies, damned lies and statistics: car scrappage scheme

An Saoi: On Tuesday morning Alan Nolan of the Society of the Irish Motor Industry was on Morning Ireland and made reference to the increase in car sales in January of approx. 5%. He uttered some of the same phrases that were mentioned about shopping in the run up to Christmas, which as the January VAT returns showed did not conform to the facts. He said that there was “great footfall in dealerships and great interest”.

Car sales are a serious source of tax revenue and in the interest of commenting accurately on tax issues, I decided I had better have a look at the SIMI National Vehicle Statistics, which are provided from figures prepared by the Revenue Commissioners.

Right enough, there was a 5.04% increase in new car sales but a 9% decrease in new car registrations because the number of used imports had fallen by nearly 46%. Now when a used car is imported VRT and Vat must be paid, just as with a new car. SIMI have helpfully provided the number of new cars sold by marque and it is clear that sales of larger cars, Mercedes, Audi, BMW etc. have been particularly badly hit. It appears that most of the cars sold fall into the less polluting group, with much reduced VRT and possibly the scrappage grant payable also.

As all cars are imported, it makes little difference to the State whether the car a person buys is used or new when it is imported. The tax yield may be slightly higher on a new car - that is all. There seems to be little if any benefit to the country from the scrappage scheme, or am I missing something? It looks like a serious waste of money.