Dáil Éireann Debate, Tuesday - 9 May 2023
112. Deputy Brian Leddin asked the Minister for Finance if there are plans to introduce weight- and size-based taxes on private vehicles in Ireland to incentivise a switch to smaller and lighter vehicles in an effort to ensure Ireland's vehicle fleet is as efficient as possible; and if he will make a statement on the matter. [21506/23]
View answerOfficials from the Department of Finance continue to monitor developments in the vehicle taxation area. New proposals are considered and current vehicle tax policies are kept under review as part of the Tax Strategy Group and Budgetary cycle. Going forward, it is possible that vehicle taxes may shift to weight-based in order to protect the vehicle tax base.
However, you should note that the existing vehicle tax structures in the State currently have a very strong environmental rationale, with the more pollutant vehicles paying higher rates of tax. Additionally, as many heavier vehicles currently on the market are more pollutant – with the exception of large Electric Vehicles - those heavier vehicles incur higher rates of tax, between Motor Tax, Vehicle Registration Tax and the Nitrogen Oxide Charge. Vehicle weight generally correlates with vehicle emissions, therefore within the existing tax system the heaviest internal combustion engine cars are already subject to higher rates of tax whereas lighter, more efficient cars are subject to lower rates of tax.
Vehicle Registration Tax is an emissions-based tax and is calculated based on the Open Market Selling Price and tailpipe emissions of the vehicle. The rates were changed in Budget 2022 to further incentivise motorists in the market for a new car to make ‘greener choices’. The new rates table (see below) increases Vehicle Registration Tax rates progressively from band 9 so that high emission vehicles pay more. This reflects the environmental rationale of the tax and underpins Government commitments to decarbonise road transport.
In recognition of the environmental health costs caused by pollutants emitted in particularly high quantities by diesel vehicles, Budget 2019 saw an introduction of a 1% surcharge on all diesel vehicles. Budget 2020 replaced the 1% surcharge with a surcharge tied to nitrogen oxide emissions levels based on the “polluter-pays” principle, where the greater the level of nitrogen oxide a car emits, the higher the surcharge. Budget 2021 saw an adjustment to the surcharge structure (see table below) so as to underpin its environmental rationale and incentivise the uptake of cleaner cars.
It is clear therefore that the current structure is incentivising the purchase of ‘greener’ vehicles as evidence from 2022 suggests the average car registered emits approx. 111 gCO2/km (Band 9), compared to 2020, where the average car registered emitted 135.6 grams of CO2 per km (VRT Band 13).
Table 1: VRT Rates Table
|
Emissions Band |
CO2 (WLTP) g/km |
OMSP X |
|
|
FROM |
TO |
Rate |
|
|
1 |
0 |
50 |
7.00% |
|
2 |
51 |
80 |
9.00% |
|
3 |
81 |
85 |
9.75% |
|
4 |
86 |
90 |
10.50% |
|
5 |
91 |
95 |
11.25% |
|
6 |
96 |
100 |
12.00% |
|
7 |
101 |
105 |
12.75% |
|
8 |
106 |
110 |
13.50% |
|
9 |
111 |
115 |
15.25% |
|
10 |
116 |
120 |
16.00% |
|
11 |
121 |
125 |
16.75% |
|
12 |
126 |
130 |
17.50% |
|
13 |
131 |
135 |
19.25% |
|
14 |
136 |
140 |
20.00% |
|
15 |
141 |
145 |
21.50% |
|
16 |
146 |
150 |
25.00% |
|
17 |
151 |
155 |
27.50% |
|
18 |
156 |
170 |
30.00% |
|
19 |
171 |
190 |
35.00% |
|
20 |
191 |
- |
41.00% |
Table 2: VRT NOx Surcharge
|
Thresholds (NOx mg/km) |
Rate per mg/km |
|
0-40 |
€5.00 |
|
41-80 |
€15.00 |
|
81+ |
€25.00 |
