A VRT refund scheme - where the residual value of the registration tax is refunded when the car is permanently exported - would mean higher trade-in values for used cars.
At present dealers who take trade-ins have no market to sell these cars on outside of the Republic because the prices of the used car is kept artificially high due to the residual value of the VRT.
If a refund of that residual amount was paid on cars there were permanently exported, dealers would already have a guarantee of payment on some 30 per cent of the value of the car. Thus there would be increased scope for negotiation on the trade-in value.
A VRT refund therefore would also mean stability and consistency of used car values.
On the reverse the government has argued that the number of used cars exported would rise dramatically if it introduced the measure, which would cost it too much in refunded VRT.
Although there is little evidence to support this and the Danish government's experience would say otherwise, the Irish government seems to be taking a 'why risk it' attitude.