Car hire firms in Ireland could suffer from new toll charge

Car hire firms in Ireland could suffer from a new toll charge setup, which is being implemented on the M50, one expert has said.

The toll on the road is due to become a barrier-free setup, which car hire firms are saying will be detrimental to their business as they will no longer be able to claim VAT on tolls, reports Irish newspaper the Herald.

According to the publication, the National Roads Authority confirmed that VAT will no longer be applicable on tolls.

John Wallace, president of the Vehicle Leasing Association of Ireland, told the paper: "In effect, that's a 21 per cent increase in cost for a business user straight away.

"The rates remain the same - there are some changes for some of the axle weights, etc, but for passenger cars, the charge is remaining at two euros but it's now exempt from VAT."

He added that the change had almost gone unnoticed until now and concluded that the situation is a "fiasco".

"It's taxes by stealth," Mr Wallace said.

Holidaymakers may feel the effect of this decision should car hire firms decide they need to pass the cost onto those renting vehicles.

According to the Daily Telegraph, a growing number of Brits are hiring cars abroad as family motoring holidays are making something of a comeback.

The newspaper reports that the increase in people taking their cars abroad to countries such as France, Ireland and Spain has been so great that P&O ferries has put an order in for two new boats to accommodate the extra custom.

A spokesperson for the ferry firm told the publication: "There was a downturn in people taking their cars abroad, but this seems to have reversed as people get disillusioned with airport hassle."

When both the ships are in operation in September 2011, P&O will be able to carry 3,000 cars across the channel per day, which is a 20 per cent increase on its current capacity.

However, many holidaymakers choose not to take their cars abroad with them, opting to hire a vehicle once they are in the foreign country.

This system is more suited to those who wish to fly to their chosen destination, if it is too far away to travel to by boat for instance.

Hiring a car allows travellers to explore the destination they are in and get off the beaten track when they choose to, rather than relying on organised tours.