New digital tax, insurance and NCT system

It’s not official yet, but the Irish Government is actively pursuing the idea of a digital car tax disc to replace the current paper disc system.

Car tax, or motor tax to give it its official name, has been a part of Irish motoring life since the first such tax — at a rate of £1 per horsepower — was introduced in 1921. Tax discs, to be displayed in a car’s windscreen as proof of purchase, followed soon after and ever since they’ve been present in the corner of our windscreens, and usually the first thing that a Garda at a checkpoint will look at.

Now, though, the days of the paper tax disc could be numbered as Ireland looks set to follow the UK’s example and switch over to a digital system whereby the tax is tied to the car’s registration, and the requirement to have a taxed vehicle can be enforced not by Gardaí at checkpoints but by automatic number plate recognition (ANPR) cameras.

It’s known that the Department of Transport is already looking into this as a follow-up to the introduction of digital driving licences (which are coming very soon too), while digital insurance and NCT discs are also being considered.

The spokesperson for the Department said that it is “Looking at digitising motor tax, insurance, NCT discs. The printing and mailing of these discs incur significant cost to the state agencies and businesses involved and is no longer required given technology and data sharing advances.”

While a precise date has not yet been given, it seems as if 2026 is looking like it might see the introduction of such digital tax discs.

What benefits would they bring? Well, it makes motor tax instantaneous, so as soon as you’ve paid your tax, your car is instantly recognised as being fully road-legal, with no need to wait around for the disc to come in the post. There would be a considerable cost-saving to the Exchequer too, as there would be no need to print and post physical discs, although don’t expect that to translate through to a reduction in motor tax any time soon.

The system would also be relatively simple to implement — the Gardaí, through the computerised PACE system, already have fully digitised data on which car is taxed and which isn’t, so working off the number plates would present no significant increased burden when it comes to policing the new rules.

In theory, such a system would also be more compatible with other European countries, reducing the potential for being questioned about your car’s tax if you’re bringing your car on holiday.

However, there are potential pitfalls too. According to The Guardian newspaper, when the UK introduced paper-less car tax in 2014, the number of untaxed cars in the country trebled — to a massive 700,000 within three years, and the cost of those untaxed cars was far, far higher than the cash saved in not having to print paper discs anymore.

Increased enforcement helped bring the number back down, but even now the DVLA (Driver and Vehicle Licencing Agency) in the UK reckons that there are still at least 500,000 untaxed vehicles on the road. Clearly, people feel that not having to display a tax disc in the window means that it’s easier to get away without paying the tax at all.

Figures from the UK’s Department for Transport (DfT) show that the government there has lost an estimated £94 million in motor tax revenue (and that was the lower estimate, the higher estimate in the study was a staggering £281 million) dwarfing the £14 million saved in not having to print tax discs. That’s despite an estimated 2,500 cars per week being clamped and fined for not having up to date motor tax.

Ireland would do well to heed the UK’s warnings on this subject. The RAC Foundation criticised the decision to phase out tax discs, with its director Steve Gooding saying: “Getting a piece of paper to stick in the windscreen might seem a quaint idea in the digital age, but what we've lost is the daily reminder it provided for all to see when the next payment was due.”

Equally, while the NCT cert could also easily — in an administrative sense — go paperless as all of that data is already digitised, getting insurance discs to go digital could present an issue, the primary one being that the Motor Insurance Database would have to be kept up to date to ensure that no-one who has insurance - but whose details have not yet been uploaded to the system - is caught out. While in theory the Motor Insurers Bureau of Ireland does update that database daily, the system has been criticised in the past for not being reactive enough, and for allowing such things as written-off cars to slip through the cracks and be sold on as undamaged vehicles.