Motor trade body SIMI has called for the Minister for Finance to reduce vehicle registration tax (VRT) rates by 2.5 per cent in the coming Budget and for the Government to reintroduce a scrappage scheme.

In the last budget, the Government expanded the 30 per cent top band of VRT to include cars from 1,900cc. Previously the top rate started at 2,000 cc.

SIMI says the change resulted in "a cost of €11.5 million to the industry and a negative long-term impact on Government revenue from VRT". Introducing its its pre-budget submission, SIMI chief executive Mr Cyril McHugh, said the new car market has dropped by 30 per cent in the past three years. "This decline will be accelerated by the 1.9-litre change in last year's budget and the application of PRSI to benefit-in-kind tax on cars. Budget 2004 must contain positive measures to bolster the confidence of the car purchaser and redress the downward trend in new car sales."

SIMI claims a "dormant market exists among those who bought cars in 1999, 2000 and 2001" and these motorists will trade up to a new car if offered a proper incentive to do so.

The submission also proposes a scrappage scheme comprising a VRT reduction of €1,000 when a car of eight or nine years old is traded against a new car and €1,500 for cars of 10 years or older. It claims that by 2004 the number of cars 10 years and older will be just 10,000 short of the figure for 1995, when the last scrappage scheme was introduced. It ran until 1997.SIMI also calls for the abolition of the 2 per cent levy on motor insurance premiums and the withdrawal of proposals to apply benefit-in-kind tax on car parking spaces.