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The tax increases on fuel and new high-emission cars are part of a major overhaul of the tax regime for motorists introduced in the 2021 Budget.
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 allow for the new international testing regime that aims to deliver more realistic emissions. ratings for all cars.
On the motor tax on new cars, Donohoe said the number of vehicle registration tax (VRT) tax bands will increase from 11 today to 20, and will apply to all new car sales starting January 1. It has also adjusted the NOx surcharge bands, a tax that applies to all new cars and used imports.
With the NEDC system being replaced by a new system, known as WLTP [Worldwide Harmonised Light Vehicles Test Procedure]Mr. Donohoe also plans to reform the annual auto tax regime.
Currently, cars registered for the first time before July 2008 are classified by engine size, while cars classified after that date are taxed based on NEDC emission ratings. A third tax table based on WLTP ratings will be applied to all new cars, and used imports, registered for the first time as of January 1.
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. “
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