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Friday 22 August 2014

Budget 2013: Car tax up €36, dole to be cut after six months

Fiach Kelly Political Correspondent

Published 04/12/2012 | 05:00

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Household income slipped in the first quarter

MOTOR tax on the average family car will climb to more than €500 for the first time in tomorrow's Budget – an increase of €36.

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And drivers of eco-friendly cars with the lowest emissions will see their annual bill go up by at least €40, the Irish Independent has learned.

Green motorists are being hit with far steeper hikes, as the Government tries to close the gap created when the tax bands were changed to reward low-emission cars.

But there will still be some incentive for people to buy green cars, as cars with lower emissions will still pay substantially less motor tax.

Also among the painful measures in tomorrow's Budget are dole cuts for some people who have been without a job for just six months.

And there are expected to be reductions in the back-to-school allowance, plus carer's and education payments.

The full raft of welfare cuts being proposed by Social Protection Minister Joan Burton are revealed in a confidential cabinet document seen by the Irish Independent.

The Labour Party deputy leader also wants to clamp down on welfare fraud and has tabled a menu of savage cuts to rein in spending in her department by €435m.

However, cuts to the budgets of the Department of Health and the Department of Social Protection are being reduced by €150m each, giving ministers James Reilly and Ms Burton more wriggle room.

The €300m reduction came about after efforts by Finance Minister Michael Noonan and Public Expenditure Minister Brendan Howlin to find money elsewhere.

As revealed in yesterday's Irish Independent, the Government is expected to use the extra cash from millionaires' mansions to reduce the property tax for owners of ordinary homes. The change is set to cut the property tax bill for the average house by €30 from €300 to €270.

The new rates expected are a base rate of 0.18pc – slightly down from 0.2pc – with a new higher rate of 0.25pc on houses valued at more than a €1m.

Changes to the motor tax bands will also be revealed tomorrow. The current system taxes cars registered after 2008 on their emissions count, while vehicles before that are taxed on engine size.

Four out of five motorists are still paying under the old system but the emissions-based system has led to a massive shortfall in motor tax, which the Government is trying to make up.

Those with pre-2008 cars face an average 7pc hike, while those on the new system will be paying at least 20pc more.

Sources have confirmed the exact increase for the most common family car, a 1.6 litre engine, will be a jump from €478 to €514. Those with two-litre engines will fork out an extra €50, with their annual cost increasing from €660 to €710.

The Irish Independent first revealed the Government had targeted motor tax for an additional €150m, or a 15pc increase, last month. However, drivers of eco-friendly cars will be hit with the steepest rates increase. Someone on the new system with the lowest A emission rating will see their annual tax jump from €160 to €200.

This takes in a broad range of cars, with the BMW 520d diesel costing more than €45,000, and the Toyota Yaris (€15,000).

But it will be even more of a burden for cars on higher emissions bands. Most motorists who own a car registered after 2008 fall into the second and third emissions bands, B and C, and pay €225 and €330 in tax.

There will also be a shake-up of the entire motor tax system, which the Government hopes will help close the gap created over the past four years.

Some 90pc of all new cars bought since 2008 have fallen into the lower three tax bands, leading revenue falling to €988m last year, a reduction of €72m since 2008.

Irish Independent

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