EU backs scrappage scheme

THE EU Commission has joined the Society of the Irish Motor Industry (SIMI) in encouraging Ireland to set up scrappage schemes, following a discussion between Commission officials and scrappage scheme experts. The Commission described the schemes as one of the major measures “to boost demand for new vehicles and accelerate fleet renewal”.

Outlining its support for such schemes, the Commission said that “financial supports granted to consumers. . . do not constitute state aid”. Such “aid” would not necessarily reduce the State’s coffers, as relief comes in a rebate of taxes on purchases which, in all likelihood, would not otherwise be made.

The Commission recently stated that scrappage schemes are among the most effective measures of clearing manufacturer’s yards and protecting jobs.

Enterprise ministers, including Tánaiste Mary Coughlan, will meet in Brussels tomorrow to discuss the importance of coordinating such “stimulus” moves across the EU.

But a Department of Finance spokesman confirmed that, while a submission was received, “no decision has been made”. Government sources said the difficulty was that stimulating the industry could adversely affect the balance of payments, with capital leaving Ireland to support manufacturing jobs abroad.