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VAT on M50 toll would add insult to injury - AA VAT on M50 toll would add insult to injury - AA

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VAT on M50 toll would add insult to injury - AA

Published 25th June 2010Read Time 4 min

VAT at 21 per cent is to be applied to State-owned tolls at the West-Link Toll Bridge on the M50 and the Dublin Port Tunnel with effect from next Thursday 1st of July. This is because of the Revenue Commissioners decision that toll charges levied by the State must include VAT. Privately operated toll charges already include VAT on foot of a European Court ruling in July of 2000
The tax would mean that the toll for cars would raise form its current rate of €2.00, €2.50 & €3.00 (depending on whether you have a tag/account) up to €2.42, €3.02 & €3.63 respectively. However those prices will not apply from this week because – for now – the NRA is absorbing the tax within the toll and is not passing it on to road users.

“It is absolutely critical that motorists should not be faced with yet another price hike on the M50” says Director of Policy Conor Faughnan. “We had VAT on the West Link before when it was in private hands. When the bridge came into State ownership in 2008, the VAT was not removed. They simply took the existing VAT-inclusive price as the new State-controlled toll. It would be an act of utter bad faith to now re-apply VAT on top of that figure.”
The AA is calling on the NRA and the government to make a commitment that these VAT charges will never be passed on to motorists.
“The NRA is appealing the Revenue Commissioners’ decision, and good luck to them.” Says Faughnan. “However it does not make a blind bit of difference to motorists which arm of the state is picking their pocket. The effect is the same. The state cannot add Vat, change the description to a state charge and then add Vat again.”
Quite apart from its unfairness, increasing toll prices has the effect of reducing numbers on the toll road because it causes traffic to divert. An AA Motorists’ Panel survey of 7,000* Irish motorists carried out last month showed that 33% of motorists that toll charges influenced their driving patterns. Those cars wind up causing congestion extra in places like Ballyfermot and Navan road and Lucan road as they refuse to use the M50.
“Diversion caused by tolls is a fact of life in places like Fermoy, Kinnegad and Drogheda.” Says Faughnan. “With the M50 flowing far better now that the old toll booths are gone it would be a retrograde step to force motorists off it price increases.”
This VAT will be effective July 1st; however the National Roads Authority will be absorbing the cost of this vat until that ruling is made. The imposition of VAT means that motorists who now pay €2, €2.50 or €3 per trip will have to pay increases between 42c and 63c.
M50 Toll Charges: a history of double-dealing
Ten years ago, the charge for the West-link toll was IR£0.80. It was then announced that this charge would be subject to VAT at 20% (16p). This brought the charge up to 96p, which was rounded up to IR£1.00. Hence a 21% VAT meant an increase of 30% to the motorist. When the Euro was introduced, £1.00 became €1.27, which was then rounded off to €1.30, an abuse of the currency transition. This toll then rose to €1.50 in 2004, €1.80 in 2005 and €1.90 in 2007. In theory VAT should have been removed when it came into State ownership in August of 2008: in fact it went up to €2. Now you can only get the €2 price if you also pay for a toll tag (others pay €2.50 with a video account, €3.00 if no account has been set up), and it is now proposed to add VAT again.
January 2000                      Toll charge:                         IR£0.80
July 2000                              21% VAT added                IR£0.96                 (rounded up to £1)
January 2002                      Euro arrives                        €1.27                     (rounded up to €1.30)
January 2003                      Price increase                    €1.30
January 2004                      Price increase                    €1.50
January 2005                      20% price increase           €1.80
January 2007                      Price increase                    €1.90
August 2008                       State takes ownership,Vat no longer applies     €2.00, €2.50, €300
July 2010                           21% VAT reimposed       € no change – NRA absorbing VAT temporarily