Ireland continues to use the tax system to provide a stimulus to encourage activities that can assist policies promoting sustainable energy and tackling climate change. Details of the relevant tax incentives introduced since 1997 are as follows:
Benefit-In-Kind exemption on employer provided public transport tickets to encourage commuters who travel to and from work by car to switch to public transport thereby easing traffic congestion at peak times;
Tax relief on corporate equity investments in certain renewable energy generation projects which are eligible for tax relief in the form of deduction from a company's profits;
Section 50 of the Finance Act 2004 provided for the introduction of a limited scheme of relief from excise tax for biofuels. The purpose of the provision was to allow qualified and conditional relief from excise of biofuel used in approved pilot projects;
Section 81 of the Finance Act 2006 provided for a large scale scheme of excise relief intended to cover annual production of 163 million litres of biofuel over 5 years;
VRT Relief for hybrid electric vehicles was introduced in January 2001, the purpose of the scheme — which provides for a 50% reduction in the VRT charge — is to encourage the purchase of vehicles that use a combination of an internal combustion engine and an electric motor to derive motive power; and
As a complementary measure, the Finance Act 2006 provides for a new 50% VRT relief to promote new flexible fuel vehicles (cars designed to operate on biofuels) for an initial period of 2 years.
As regards benefit-in-kind exemption on employer provided public transport tickets, I am advised by the Revenue Commissioners that as taxpayers are not required to provide details of this benefit in their tax returns there is no basis on which an estimate of the cost to the Exchequer of this tax exemption can be provided.
The corporation tax forgone in respect of corporate investment in certain renewable energy generation projects is estimated at close on €8.5 million since inception to end 2005, the latest year for which figures are available. These are broken down as to €1 million for accounting year 1998/99, €3.6 million for 1999/00, €0.7 million for 2000/01, €1.3 million for 2001, €1.0 million for 2002, €0.1 million for 2003 and €0.8 million for 2005.
In relation to the limited scheme of relief from excise tax for biofuels introduced by section 50 of the Finance Act 2004 the amount of excise forgone was €422,000 in 2005 and €911,000 to date in 2006. There is as yet no basis for estimating the cost of the scheme introduced by section 81 of the Finance Act, 2006.
Figures of VRT relief for hybrid electric and flexible fuel vehicles are as set out in the following table.
Year
|
Hybrid electric vehicles
|
Flexible Fuel Vehicles
|
|
Numbers
|
Cost of VRT relief
|
Numbers
|
Cost of VRT relief
|
|
|
€
|
|
€
|
2001
|
20
|
56,361
|
Nil
|
Nil
|
2002
|
11
|
36,980
|
Nil
|
Nil
|
2003
|
9
|
33,975
|
Nil
|
Nil
|
2004
|
246
|
978,931
|
Nil
|
Nil
|
2005
|
324
|
1,648,728
|
Nil
|
Nil
|
2006 to date
|
634
|
4,962,268
|
73
|
228,312
|
Total
|
1,244
|
7,717,243
|
73
|
228,312
|