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About LinkBacksDid you ask him how much the German government takes in tax on a new car sale? Reading between the lines of your post and conclusions, I'm guessing you didn't.Originally Posted by rockofcashel
Did you ask him how much the German government takes in tax on a new car sale? Reading between the lines of your post and conclusions, I'm guessing you didn't.
no pasaran!
Yeah, hang on, we're giving people €1500 to take ten year old cars off the road.
1) More dangerous cars are being taken off the road
2) Isn't the state taking in more than €1,500 in VRT and taxes? Surely this is a revenue-positive scheme?
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Do you want another lesson in economics Tonic ?
Re read my post. The majority of new car sales i.e. those who took advantage of the scrappage scheme, are coming from the corporate or agency sector, who invariably change their fleets on an annual basis. So, the scrappage scheme is now giving the corporate sector a 1,500 euro subsidy to buy an asset that they were likely going to purchase in any case.
Brilliant logic, instead of taking in the full VRT and VAT from the car sale, they'll now take in the full VRT and VAT from the sale... less 1,500 in subsidy. Economic genius eh ? (though I will admit, that the vast majority of corporate sales are for cars which are less than ten years old, and will therefore not qualify for the scheme in any case)
Now, how about this for a better idea. Instead of giving a subsidy to the car industry, to sell cars and send the majority of the money out of the economy, why not instead reduce or get rid altogether, the 10 euro airport tax and stimulate inward travel of tourists to the country?
Inward tourism is also haemorraging jobs as much as the car industry, and at least tourists who come into the country will be spending the money in Ireland.
Imagine that... pay out the same amount of money in subsidy, but actually encourage spending in Ireland, rather than encourage Irish consumer spending on imports.
1,197 people agree with me.. how many agree with you ?
1. A ten year old car in no less safe than a brand new car. Cars themselves rarely if ever are the cause off accidents. People driving like ten year olds are much more likely to be at fault.
2. How many people driving a ten year old car do you think will suddenly wake up in the morning and think.. wow, if I buy a brand new car, I can get 1500 euro off. I think I will do that.
3. See my post above, where moving the subsidy to get rid of the airport tax, will provide a better way of increasing revenue, than sending Irish consumer spending out of the country
1,197 people agree with me.. how many agree with you ?
I don't think we will see the scrappage boost to sales for a couple of months as new cars car takes weeks to months to deliver. It is a no loss for the state such is the huge VRT & VAT already paid on cars.
I didn't think 1500 euro would be enough convince people to buy anything but the cheapest new cars but most car companies are adding their own discounts so total discount anything from 5000-3500. Some cars may see little depreciation over 1-2 years such are the discounts.
The only problem with this is the cars heavily discounted may be hard to sell when scrappage deal is done as will be large price difference.
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Car schemes, home credits, bank bail outs are short term duct tape measures that do not address the main causal factor. Countries that adopted the car scrappage schemes at first have seen their sales hit a brick wall since it expired. In America they are talking about having to do a second fiscal stimulus even though their debt is soaring.
History is repeating itself and they are making the exact same mistakes. We have to move towards allowing the market to work freely and allowing free enterprise, inventions and innovations flourish.
"No one rules if no one obeys" - Tao
Also keeps people working in garage forecourts, but now that you say it FF don`t want people in work so for the FF aim of competitiveness it is a bad thing.
Not necessarily:
a) if the revenue from the extra cars sold under this scheme over 2009 do not cover the €1500 VRT relief then no;
b) if consumers trade down from more expensive, higher emission grade, higher VAT and VRT vehicles then no (we already have evidence of this in the change in mix of car sales in January which switched decisively to A and B grade vehicles from 55% in Jan 09 to 68% in 2010); and,
c) if there is an element of people bringing forward when they would otherwise have bought a car from 2011 etc in order to take advantage of the relief then no.
But the ultimate point on whether this is a 'revenue-positive' scheme has to be that what the government is doing is to incentivise imports and taking away from the circular flow of money in Ireland. The big beneficiaries here are the foreign manufacturers. This scheme would not pass muster on any cost benefit analysis for its economic impact locally.
Last edited by kerrynorth; 22nd February 2010 at 12:11 AM.
Germany is a car manufacturing country, Ireland is not therefore the value to the German exchequer of every car sale is superior to that available to the Irish exchequer.
Regards, Pat Gill
You lecture about lessons in economics and then blow your own arguement in pieces.
No reason for any corporate or agency to keep cars than long to qualify for scrappage scheme as capital allowances take account of that and pretty pointless to hold a car that long as the maintenance cost pretty much wipes out any benefit.
Most corporates have a fixed possible of X years and / Or X thousand KM and by continuous replacement program they minimse tax anyway.
Fraid its a spurious arguement here as have yet to come across anyone with a company car that is 10 years old.
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