The number of vehicles on Irish roads increased by around 20% from 2016 to 2024, however motor tax receipts have fallen by 12% according to the annual report by the Comptroller and Auditor General (C&AG).
The spending watchdog said a total of €1.9 billion in revenue was collected from vehicle registration tax (VRT) and motor tax in 2024.
The report noted the combined cost of administering the motor tax system is still not centrally compiled or reported.
For example, costs incurred by the Department of Transport in respect of motor tax collection are charged to Vote 31 Transport under subhead F.3 which is titled "digital hub".
In 2024, the total costs incurred in respect of this subhead amounted to around €32m.
However, this includes costs not associated with the collection of motor tax such as driver licensing services.
Furthermore, the subhead charges do not include Departmental pay costs associated with the collection of motor tax.
Meanwhile the C&AG reports the costs of running motor tax offices incurred by the local authorities for 2023 was almost €31m.
The Department of Transport said the motor tax system is not the responsibility of a single Department or agency, and these roles have changed in the years since the 2016 report was published.
Online take-up was 87% in 2024, and the Department continues to explore options to increase this further, however it said online motor tax is just one part of the service, so identifying motor tax technical costs is not straightforward.
The C&AG recommended the Department to evaluate the potential for IT solutions to reduce the cost of operating the motor tax system, and acknowledged this is in progress.
Last year the Department spent around €5.8m on the printing and distributing of motor tax discs, while there has been a 58% increase in postal costs over the last three years.
The National Vehicle and Driver File Bill 2025 contains provisions that will remove the requirement for drivers to display a paper motor tax disc on vehicle windscreens.
Subject to the approval of the Oireachtas, it is planned that the Bill will be enacted by the end of 2025.
However, the C&AG said such systems will also require investment in technology to enable enforcement.
Another area identified in the report where motor tax is not being collected is the impact of change of ownership on arrears, where the arrears relate to the previous owner.
The de-facto exemption for payment of motor tax arrears following a change in ownership arises as there are currently no legal provisions prohibiting this practice.
The Department has estimated the associated loss of motor tax, associated with the de facto change of ownership exemptions, is at €11.6m for 2024.
However it said this does not represent the full value of motor tax payment non-compliance, because the maximum period of arrears counted is 12 months per vehicle, and vehicles that remain untaxed are not included.
The C&AG recommended the The Department of Transport should instigate a process of regular National Vehicle and Driver File data analysis to inform the development of motor tax policy and the enforcement of motor tax regulations.
It said unusual patterns of transactions should be identified and investigated.
