I don't have any huge objection to increasing the band A & B rates -they were too low to start with (relative to the cc based system). Don't give us the beal bocht if you could afford to buy a new car in the middle of a recession. But the blanket 5% increase on the already high cc based system is misguided. I believe they have already passed the point of deminishing returns -people not taxing, scraping, abandoning, their cars, etc.
This is a typical Irish solution to an Irish problem -we'll up the price, (assume demand will remain at the same level) hey presto more income -job done.
Economics 101 -Fail.
We saw it with the last vat hike -exodus up north for shopping. We've seen it with publicans -uping the price of a pint to try and compensate for decreased foot fall -result pubs going out of business weekly.
Higher volume lower margin is what we need -unfortunately Ireland doesn't do stack em high sell em cheap. The concept of lowering the price just does not compute.
Then there is the directly related issue of duty and VAT on fuel. The increase in the price of fuel will curb demand for fuel -resulting in less consumption -which will at least partially if not totally offset the increase due to the price rise. Again a smaller group of people paying more -instead of a larger population making smaller contributions.
Look at the
IRISH DEMAND FOR PETROL it's been falling steadily since 2008. Even since the start of the year it's down ~10% that's a massive decrease.
And before anyone says that's because everyone bought a '08 daysul,
look at the
IRISH DEMAND FOR DIESEL With the exception of a small increase in march 2008 -the demand for diesel has been falling since 2008 also. This is partly due to all those 1000mpg 520D's on the road -but is mostly due to people travelling less -i.e. decreasing demand. Add a price increase to already falling demand -and revenues will only go in one direction
Annoy the whole population - while decreasing revenue