Tuesday, 9 July 2019

Ceisteanna (166)

John Lahart


166. Deputy John Lahart asked the Minister for Finance his views on a car scrappage scheme; the estimated cost of such a scheme; if consideration is being given to such a scheme; and if he will make a statement on the matter. [29718/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

The Government's Climate Action Plan contains the following action point: As an alternative to the current grant regime, consider in 2020 a car-scrappage scheme to promote the purchase of electric vehicles. This is directed to my Department.

The previous car scrappage scheme operated from January 2010 to July 2011. VRT relief of up to €1,500 was available upon registration of a new vehicle, subject to the scrappage of a qualifying old vehicle. The VRT relief was provided where a new category A, or passenger car of emissions band A or B with CO2 emissions of 140g/km or lower was purchased and registered and an old car scrapped.

To qualify for relief, the scrapped vehicle must have been registered in the State in the name of the purchaser of the new car for at least 18 months previous to the date of scrappage;  and on the day of scrappage been ten years old or more from the date of first registration.

The current situation is different. There are currently significant Government-backed incentives in place for electric vehicles including VRT relief of up to a further €5,000. Based on this existing relief, a person purchasing an electric vehicle with an Open Market Selling Price of under €36,000 would currently pay no VRT. This suggests that any car scrappage scheme that was based on the provision of VRT relief would be ineffective because no VRT is paid on the registration of most Battery Electric Vehicles to begin with. The principal effect of any such VRT relief would be to gift taxpayers money to reduce the acquisition costs for buyers of higher end BEVs.  In that regard it is unlikely that there would be high volume of motorists with 10 year old cars who would be in the market for higher end Battery Electric Vehicles.    

In addition, the market is more complex than in 2010 with the emergence of PCPs as a popular method of acquiring a car for use and potentially purchasing it. The default position is that the legal owner of the vehicle, generally the car financing company, would be the direct beneficiary of any such VRT relief.