Dáil Éireann Debate, Thursday - 5 October 2023
138. Deputy Brian Leddin asked the Minister for Finance what measures he intends to apply in budget 2024 to reverse the trend in sales of large and heavy vehicles for private use, in recognition of the increased safety risk to vulnerable road users posed by heavier and larger vehicles, the increased demand for fuel and energy and the overall impact on the carbon budget for the transport sector; and if he will make a statement on the matter. [43174/23]
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, as outlined in this year’s Tax Strategy Group Paper.
The scale of the proposed ‘electrification’ of the national car fleet will entail significant revenue risk, with the Exchequer estimated to lose approximately €1.5 billion worth of revenue annually from motor tax, VAT, fuel excise from Internal Combustion Engines (ICE) vehicles. Additionally, as Battery Electric Vehicle (BEV) uptake increases, the financial sustainability of supports for BEVs will have to be reconsidered.
However, it is important to note that the existing vehicle tax structures in this State currently have a 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 notable exception of large EVs - those heavier vehicles incur higher rates of tax, between Motor Tax, Vehicle Registration Tax and the NOX Charge. In summary, vehicle weight generally correlates with vehicle emissions, therefore within the existing tax system the larger more pollutant cars are those which are already subject to higher rates of tax whereas lighter, more efficient cars are subject to lower rates of tax.
Regarding any future decisions on EV relief, it is a longstanding practice of the Minister for Finance not to comment further, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.
