Dáil Éireann Debate, Tuesday - 23 October 2018
201. Deputy Michael McGrath asked the Minister for Finance the reason it is planned to place a cap of €50,000 on the original market value for the extension of benefit-in-kind on electric vehicles; the number of electric cars purchased under benefit-in-kind in 2018; the number of those purchases greater than €50,000; the number of electric vehicles on sale here for €50,000 or less; and if he will make a statement on the matter. [43292/18]
View answer204. Deputy Michael McGrath asked the Minister for Finance the estimated cost in addition to the €3 million provided for in budget 2019 documents if the €50,000 cap is removed for the extension of the 0% benefit-in-kind rate for electric vehicles; and if he will make a statement on the matter. [43340/18]
View answerI propose to take Questions Nos. 201 and 204 together.
Vehicle benefit in kind (BIK) is chargeable where, by reason of employment, a vehicle is made available (without a transfer of ownership) to an employee, and is available either for that individual’s private use or to his/her family or household.
Comprehensive data regarding BIK on company cars does not currently exist and it is not possible to provide precise information in relation to the take-up of the 0% benefit-in-kind rate for electric vehicles or the removal of the €50,000 cap. I have asked my officials to further discuss this matter with Revenue with a view to improving the data quality in this area .
I extended the benefit-in-kind exemption for electric vehicles until 31 December 2021 to support policies to reduce carbon emissions in the transport sector. This forms part of a broader series of measures to support the uptake of electric vehicles, including VRT relief of up to €5,000, an SEAI grant of up to €5,000, very low motor tax of €120 per annum, 50% discount off tolls fees and 0% BIK on electric charging.
Having regard to value for money and tax equity considerations, a cap of €50,000 on this exemption is applied such that an electric vehicle with an original market value exceeding €50,000 will be subject to BIK on the amount in excess of €50,000. The cap will take effect from the 2019 tax year.
In examining value for money and tax equity considerations, the quantum of tax expenditure provided annually to qualifying taxpayers in relation to the use of high end cars must be taken in account. To take the example of an electric vehicle with an original market value of, say, €150,000 that has been purchased by the employer for the use of a Director, where the employer has already benefitted from VRT relief and an SEAI grant. Without the imposition of a €50,000 cap, the tax expenditure on such a vehicle is the equivalent of an annual grant from the taxpayer to the employee or Director of up to €23,400, for a single tax year (i.e. the tax liability of the taxpayer would be reduced by up to this amount in a single tax year). This amount is equivalent to 7 or 8 home insulation grants to low income households under the SEAI Better Energy Warmer Homes Scheme, where the benefit of these grants will last for many years. Or, that the same amount, under the National Fuel Allowance Scheme, is equivalent to an allowance for about 37 low income households for one year.
I am encouraged by the fact that registrations of new electric vehicles has doubled in the year to September and am satisfied that the cap has been set at a reasonable level which maintains a strong incentive for the take-up of electric vehicles while having due regard for value for money and tax equity.
