1. The present Scheme provides for a range of tax-related benefits for the purchase and operation of vehicles for -
• qualifying individual disabled drivers,
• qualifying individual disabled passengers, and
• charitable organisations catering for the disabled persons.
2 The scheme targets - what are very costly tax reliefs - at those who qualify, namely, certain severely and permanently disabled persons with regard to physical mobility.
(a) The benefits are essentially that a new car may be purchased free of VRT (up to 30%) and VAT (@ 21%) every two years. The maximum VRT/VAT relief for a qualifying disabled driver is £7,500 and for a qualifying disabled passenger, it is £12,500.
(b) The refund of fuel excise may amount to £800 per person per year.
(c) The scheme also provides exemption from the payment of annual road tax, say £200 per annum, per vehicle.
The cost of the reliefs, excluding the annual road tax costs, in 1998 was approx. £14.4 million, as compared to £4 million as recently as 1994 . The cost in 1999 is estimated to be £17 million approx.
The current number of beneficiaries under the scheme is approximately 5,400. The cost of any possible extension even to one small group is therefore potentially very large. Relatively little use is made of the shared vehicle for use by charitable organisations t ax concession. The scheme is predominantly availed of by individuals.
3 The Disabled Drivers’ and Disabled Passengers’ Tax Concession Scheme is not means tested and once admitted to the scheme, benefits are likely to continue for life.
Background 4 Section 43 of the Finance Act, 1968 introduced an exemption from road tax for vehicles adapted or constructed for and used by disabled persons, who in the main would have been confined to wheelchairs. The scheme was later extended to allow for relief from VAT and vehicle excise duty (this was replaced by Vehicle Registration Tax with effect from 1 January 1993) on the acquisition of a vehicle and from excise duty on the fuel used. Medical certification was by the disabled person's own doctor and required that the person be "wholly or almost wholly without the use of each of his (her) legs".
5 The limited medical criteria applying under the scheme were seen as being excessively restrictive and, in addition, the piecemeal fashion in which the scheme developed, in response to external demands, gave rise to a number of anomalies and abuses. Therefore a framework for a new consolidated scheme of reliefs was provided for under Section 92 of the Finance Act, 1989. The regulations, made under that Act, set out criteria for eligibility for the reliefs as well as specifying their scope and various procedures to be complied with in order to qualify for benefit. The resultant Disabled Drivers (Tax Concessions) Regulations, 1989 came into operation on 21 December, 1989.
Review of the Scheme in 1994 6 A comprehensive review of the workings of the provisions set out in the 1989 scheme was carried out in 1993/94 and resulted in the adoption of the Disabled Drivers and Disabled Passengers (Tax Concessions) Regulations 1994. Six different types of disability are listed under the regulations and a qualifying person must satisfy one or more of these. Essentially those without the use of limbs - as distinct from those who are just weak in the limbs - will qualify. These regulations were drawn up following wide ranging consultation with the Departments of Health, Environment and Justice, the Disabled Drivers Medical Board of Appeal, the Revenue Commissioners, opposition spokespersons for Finance and organisations catering for the disabled. Medical certification is by the Senior Area Medical Officer in the local Health Board and there is an independent Medical Board of Appeal. The medical criteria are listed below.
MEDICAL CRITERIA FOR DISABLED DRIVERS AND DISABLED PASSENGERS SCHEME (S.I. No 353 of 1994)
The medical criteria which must be complied with for entry to the scheme are as follows:(a) the applicant is wholly or almost wholly without the use of both legs;
(b) the applicant is wholly without the use of one leg and almost wholly without the use of the other leg such that the applicant is severely restricted as to movement of the lower limbs;
(c) the applicant is without both hands or without both arms;
(d) the applicant is without one or both legs;
(e) the applicant is wholly or almost wholly without the use of both hands or arms and wholly or almost wholly without the use of one leg;
(f) the applicant has the medical condition of dwarfism and has serious difficulties of movement of the lower limbs.
Requests to broaden the medical criteria 7 The principal issue of concern expressed in connection with the reliefs was (and still is) in relation to the medical criteria. Arguably, the continual pressure to extend the scheme is driven by its valuable reliefs, giving access to tax free cars and motor fuel, in effect for life. The qualifying disability criteria set out in the Regulations relate essentially to persons who have severe and permanent physical mobility problems. Requests are received continually for the medical criteria to be relaxed so as to extend the range of qualifying disabilities to include other categories, notably those suffering from, among other ailments, -
cystic fibrosis, rheumatoid arthritis, osteoporosis, blindness/visual impairment, the effects of stroke, hip operations, heart ailments, cerebral palsy and epilepsy, renal failure, diabetes, autism, spina bifida, club foot and foot drop, persons with only one arm, etc.
There are regular representations and parliamentary questions seeking extension for both permanent and possibly temporary medical conditions. In addition, there are demands to give a tax free vehicle to a family member of a disabled person (either parent or child) who is not resident with the family member. The number of potential beneficiaries of extending the scheme beyond its present target group is unclear. According to lobbyists for the disabled, there are up to 350,000 persons in Ireland who could be regarded as disabled to some degree. Of course not all would/could use any widened scheme but the very attractive tax benefits makes for considerable interest in the scheme.
8 The medical criteria seek to ensure that the reliefs provided under the scheme are targeted at those who are most severely and permanently disabled - essentially those without the use of limbs. Although the number of people who suffer from, say, cystic fibrosis may not be large, to include such a particular medical condition under the Scheme, rather than base eligibility on categories of disability, would both undermine the nature of the scheme and lead to considerable pressure for the inclusion in the scheme of those who are suffering from other debilitating circumstances. The current medical criteria are designed so that people who qualify for the scheme do so, irrespective of the original cause of their disability, or their financial circumstances. A move to listing particular disabilities as automatically giving access to the scheme would change the nature of the scheme from one based on a specific disability in itself to a scheme giving reliefs in respect of particular medical conditions, and not based on a degree of medical impairment and/or mobility. For example, deaf persons could be considered as disabled, should all be eligible for tax free vehicles?
9 The issue of the medical criteria for qualification was looked at in considerable detail in 1993/94, bearing in mind the various representations which had been received seeking the extension of the benefits of the scheme to other medical categories. The review recommended that the existing specific medical criteria should remain broadly unchanged.
Representations from those suffering from blindness/visual impairment 10 During the past year, there has been a sustained campaign from the Blind Car Owners’ and Users’ Association for admittance to the scheme of those who are suffering from blindness or from visual impairment. The Association was formed to promote the extension of the scheme to the blind/visually impaired. The Association states that the condition of blindness is a factor crucial to mobility. Representations on behalf of the Association were received from Dail Deputies, Senators, MEPs and Councillors. In addition, the Minister answered numerous questions in the House requesting that the blind/visually impaired be admitted. An adjournment debate in the House on 2 March 1999 dealt comprehensively with the issue. The Association stated that while it has 70 members, there are approximately 6,000 persons’ names entered in the blind register that is held by the National Council for the Blind. In 1998, 2,358 persons were in receipt of the Blind Persons Pension, payable by the Department of Social, Community and Family Affairs. However, unlike the disabled drivers’ and disabled passengers’ scheme, this pension is means tested. As the benefits under the disabled scheme are generous, presumably a very much large number of the estimated 6,000 blind/visually impaired persons would apply for benefit, as passengers, should blindness/visual impairment be added to the list of qualifying medical criteria.
Present Medical Criteria 11 The present scheme is tightly structured. Admittance is dependant on meeting very strict criteria of disability with regard to physical mobility. A person suffering from one of the illnesses mentioned in paragraph 6 may qualify if he (she) is severely disabled as a result of his (her) condition, but not otherwise. It is considered that including specific medical conditions under the terms of the scheme would widen the scheme to a very considerable degree and would make it no longer appropriate for a tax relief scheme. It would be impossible to restrict entry of other large groups if any one new claimant group were admitted.
12 Consideration of the future of the scheme would have to balance any proposed extension with possible reductions in its benefits, especially the very generous provision allowing qualifying persons to change cars every two years, with no tax consequences when a tax free vehicle is sold on, (about 85% of beneficiaries seem to change their cars - bought tax free - after two years at market prices) but perhaps also including initial means-testing of applicants and/or ongoing means/medical assessments of beneficiaries. As revenue from motor tax receipts is now remitted to the Local Authorities, the continued exemption from that tax is a matter to be considered by the LAs. The whole issue of the tax based expenditure aspect of the scheme would also come up for review.
EU Aspect 13 Certain EU taxes including VAT and fuel excises are subject to EU rules, including rules relating to scope. In reviewing excise exemptions under EU Directive 92/81/EEC, the EU Commission proposed that Ireland eliminate this unique tax based concession and replace it with an expenditure scheme. While the Commission argued that it was anomalous and non-transparent to structure a scheme in this way, it did not pursue us on this topic. They will, however, return to this theme the next time the excise exemptions are being reviewed possibly in November this year. Ireland is the only Member State that has such an extensive tax concession.
Review Groups examining the Scheme
14 The Revenue Commissioners have carried out a wide ranging technical review of the operation of the scheme and their report is to be submitted to the Department of Finance and to the review group chaired by the Department of Justice, Equality and Law Reform. The Revenue Commissioners’ review addresses mainly technical problems with the scheme as currently constituted and makes recommendations on how to make it operate in a more effective and cost-efficient manner for its present target group. It does not address such wider issues as the extension of the scheme to cover additional categories of disability.
15. A review group, under the chair of the Department of Justice, Equality and Law Reform, has also been set up but no proposals have, as yet, emerged from that group regarding the scheme. Both Finance and the Revenue Commissioners are represented on this group. The task of this group is to identify whether and to what extent the scheme should be modified to remove the existing anomalies, including consideration of alternative schemes. It is understood that that group will now examine the technical review prepared by the Revenue Commissioners as one part of their wider deliberations and th eir current aim is to produce a report before the end of the year.
16. Those who made representations on behalf of the Blind Car Owners’ and Users’ Association have been advised to make a detailed submission to that review group. It is probable that other interest groups will also wish to meet with the group. The group is also seeking information on measures in other countries but, to date, little has suggested that a tax based scheme is in use elsewhere. Most countries seem to offer vehicle loans or grants to persons.
Options for consideration 17 The options, therefore, would appear to be:-
(a) to retain the present scheme in its current form restricted to a specific class of the physically disabled. The upside of this is the limitation of the cost of the scheme (although growing in expansiveness) and its focus on those most physically afflicted. The downside is the fact that considerable benefits are confined to a certain set of the disabled persons without any means test.
(b) to add further categories in the certain knowledge that it will be hard to draw the line at particular medical conditions or disability. This would meet the demand for relief for particular groups or individuals. The cost however would escalate with significant relief provided to a substantial number of persons without any assessment as to means.
(c) to convert the scheme to a grant type expenditure relief operated by the Health Authorities on a means-related basis. This would be a fairer and focused measure but could be very costly as it would inevitably operate on a demand-led basis. It would also be almost impossible to terminate the existing scheme for those already in possession of the relief. These would have to be "grand-fathered" in some way.
The working group may propose an additional solution but on current information this seems unlikely.
for more details visit Disabled Drivers' and Disabled Passengers’ Tax Concessions Scheme
No comments:
Post a Comment