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€ 1.51 extra for a diesel deposit and € 1,000 on the average new car price are the main changes for motorists compared to Budget 2021.
Starting at midnight, the carbon tax increase by € 7.50 per ton will mean an increase of € 1.51 in the cost of a 60-liter diesel fill and € 1.30 for a similar amount of gasoline.
Adopting several of the recommendations from the influential Tax Strategy Group’s pre-budget review, Finance Minister Paschal Donohoe has chosen to adjust the current emissions-based tax system to enable the new international testing regime that aims to offer ratings of more realistic emissions for all. cars.
Regarding the car tax on new cars, Donohoe said the number of vehicle registration tax (VRT) bands will increase from 11 today to 20, and will apply to all new car sales starting in January 1st. According to the Society of the Irish Motor Industry (SIMI), the changes will mean an increase of € 1,000 in the price of the average new car.
While current VRT rates range from 14% to 36%, the new VRT table has a range of 7% for cars with carbon (CO2) emissions up to 50g / km up to 37% in vehicles with emissions greater than 191 g / km. .
The Minister has also adjusted the surcharge bands for NOx (nitrogen oxide), a tax that applies to all new cars and used imports.
With the replacement of the New European Driving Cycle (NEDC) system by a new system, known as WLTP (Worldwide Harmonized Light Vehicle Test Procedure), Mr. Donohoe is also changing the annual motor tax regime.
Currently, cars registered for the first time before July 2008 are classified according to engine size, while those classified after that date are taxed according to NEDC emission ratings. These cars will continue to be taxed according to these criteria.
However, starting January 1, all new cars will be taxed based on their WLTP ratings. As with the VRT changes, there are more bands in the new regime, with the lower annual motor tax rate of € 120 that only applies to zero-emission cars, while a new rate of € 140 is applied. applies to vehicles with emissions from 1g / km to 50g / km.
Regarding subsidies for electric and hybrid vehicles, the current allocations will expire at the end of this year. However, Mr. Donohoe said that the changes to the VRT system should mean that these vehicles will make up the difference.
According to Mr. Donohoe: “The new modified rate and band structure for VRT and motor tax has been adjusted to take into account the fact that cars under the new test have higher CO2 emissions. We have strengthened the environmental rationale for the VRT scheme to encourage drivers looking for a new car to make greener choices. “
Fuel costs
While AA’s Conor Faughnan widely welcomed the VRT system changes, he strongly criticized rising fuel prices.
“Hiking fuel costs [via carbon tax] it accomplishes absolutely nothing for the environment and only serves to increase the cost of living for many people in Ireland who depend on their modest common car, ”he said.
“Many people in rural areas, for example, have no other way to get around and it is increasing their costs of living. It does not bring us any closer to meeting our obligations related to climate change ”.
In terms of hybrids, while the current subsidies will end this year, in his budget speech, Mr. Donohoe said, “It should be noted that the changes in VRT rates and bands offset the changes in these reliefs.”
According to Steve Tormey, CEO of Toyota Ireland, the net result of the changes will see the VRT of its new Corolla Hybrid drop € 360 under the new regime. However, buyers will lose the € 1,500 tax refund on these cars.
For other car brands, the changes will mean significant tax increases on higher-emission models, particularly some popular crossover SUVs.
At Volkswagen, for example, the prices of more traditional family hatchbacks like the Golf remain largely the same: a 115 hp Golf 2.0 diesel with a Life model will go up just € 76, but its best-selling Tiguan SUV models go up in price by average. of € 3,000.
Brian Cooke, SIMI’s CEO, said the changes will make the new car market “even more challenging for next year, reducing demand and slowing the replacement of older cars in the national fleet with newer cars from lower emissions, which in El Giro will make it more difficult to reduce emissions ”.
For electric vehicles, the VRT relief of € 5,000 for fully electric vehicles is being reduced for vehicles priced above € 40,000, so there is no relief amount available for fully electric cars worth more than 50,000 €. However, the additional SEAI grant of € 5,000 will not expire until the end of next year.
Stephen Gleeson, managing director of Hyundai Ireland, said that excluding companies from current SEAI grants for the purchase of electric vehicles remains a ridiculous anomaly and is restricting sales to companies.
“Why would a company voluntarily pay € 5,000 more for an electric vehicle than an individual when the car will be worth the same in both cases when it is resold?” he said.
“This budget is another good example of the Greens’ desire to be seen to make changes that matter without changing the things that really matter.”
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