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Motorists are getting acquainted tonight with a series of green-tinged measures announced today by the government as part of the 2021 Budget.
But what exactly has been announced and what will be the impact on your wallet?
The first announced change (and the easiest to understand) was an increase in the carbon tax.
Starting tonight, the tax on gasoline and diesel will increase to € 7.50, from € 26 to € 33.50 per tonne of CO2.
Estimates suggest that this will add about 2.5 cents per liter of gasoline or diesel.
New legislation will also be introduced in the Finance Bill to increase the tax each year by € 7.50 until 2029 and € 6.50 in 2030, to raise it to € 100 per ton of CO2.
This is ahead of the € 80 per tonne carbon target set in the 2019 National Climate Action Plan.
The latest increase will apply to other fuels, such as oil for domestic heating, starting May 1, 2021.
Speaking on RTÉ News after the announcement, Conor Faughnan, AA Ireland’s director of consumer affairs, said: “We are very disappointed with the increase in fuel prices.
“It’s not much… but it’s just a kick out for motorists and all it does is increase tax revenue. And it treats people, especially in rural areas, as if they were the source of the problem. “
Motor tax
Along with the carbon tax increase, a couple of major reforms to the existing vehicle and motor registration tax systems were also announced today.
For context, it’s important to understand that beginning in January 2021, a new emissions test system, called the Globally Harmonized Light Vehicle Test Procedure (WLTP), will be rolled out statewide.
Putting that aside for a second, Ireland currently has two separate motor tax categories.
Approximately 500,000 cars in the state that were registered before 2008 are taxed based on engine size, while nearly 1.6 million cars registered after 2008 are taxed based on their CO2 emissions.
That is not going to change after today’s budget announcement.
In fact, the government did not announce changes to the motor tax for pre-2008 cars.
Only the most polluting cars from the post-2008 regime will pay more taxes than after today’s budget.
This means that drivers with cars registered after 2008 that have a CO2 emission rate higher than 141 g per kilometer will have to pay a tax of € 400 instead of € 390.
Meanwhile, a third category of motor tax was introduced in today’s Budget to account for the new WLTP.
Starting January 1, new cars will be taxed according to their emissions ratings under this new system.
This new category of car tax is designed to encourage people to buy cleaner and more efficient cars, which means, for example, that vehicles with an emissions rating of 0g per kilometer will be taxed € 120 per year.
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At the opposite end of the spectrum, drivers of gasoline consumers with an emission rate of between 201 and 225 grams per kilometer will be charged 1,200 euros.
A new rate of € 140 is applied to vehicles with emissions from 1g per kilometer to 50g per kilometer according to the WLTP.
New rate bands
Changes to the Vehicle Registration Tax (VRT) system were also announced today, including the creation of nine new rate bands.
This will mean that cleaner vehicles, such as plug-in hybrids and electric cars that emit up to 50g per kilometer, will be charged at 7% of VRT.
Cars with an emission rating of 191g per kilometer face the toughest VRT at 37% VRT.
Auto dealers have reacted angrily to the changes.
The Irish Motor Industry Society has stated that the changes will add 1,000 euros on average to the price of a new car.
Meanwhile, the Irish Car Carbon Reduction Alliance (ICCRA), which represents the majority of new car dealers, said the increases were “disproportionate.”
“Penalizing motorists for driving conventional cars is not going to lead to an increase in electric vehicles,” said ICCRA spokesman Denis Murphy.
“Rather than incentivize the large-scale retrofit of newer, more carbon-efficient cars, people will stick with their current car for longer, resulting in hundreds of thousands of older, less carbon-efficient models stay on Irish roads for years to come. “
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