Friday 23 June 2017

Carbon tax and road tax: Double the pain as cost of heating homes and driving to rocket

Paul Melia and Treacy Hogan

HOMEOWNERS will be forced to pay hundreds of euro more a year to drive their cars and heat their homes.

Sweeping changes in environmental taxes will put every home in the State under increased financial strain as the Government attempts to shore up its finances.

The controversial carbon tax will double in four years, raising €330m a year in new taxes.

The Economic and Social Research Institute says that most households pay between €135 and €235 per year in carbon taxes.

This will double in just four years to as much as €470 a year.

The State has already taken in €168.5m in carbon taxes so far this year, with the tax on petrol and diesel contributing €135m.

The move is designed to encourage use of more efficient home-heating systems and reduce greenhouse emissions. But motorists who have made the switch to greener more fuel-efficient cars could be punished when motor tax rates are changed in just two years’ time.

The current car tax bands, based on carbon emissions, are being adjusted on January 1, 2013, following a review.

The move has been prompted by a big drop in revenue from motor tax as consumers are buying lower emission cars.

The downturn in the motor industry is also believed to be a significant factor in the review of motor tax.

“The change in purchasing patterns, combined with other factors, is having an impact on revenue yields, especially in the case of motor tax over the medium term,” the report says.

The loophole where motorists who take their cars off the road do not have to pay motor tax for this period will also be closed.

Loophole

Under existing rules, if a car owner, for example, goes abroad for six months, they do not have to pay tax for the period the car is not in use.

When they return, they can avoid the tax by having a form signed and stamped in a garda station.

But anyone can claim the exemption, and up to €75m a year is being lost through the loophole.

The gardai are not responsible for ensuring the car was not used, meaning the system is open to abuse.

This “off-the-road” facility is used by 396,000 motorists a year. Transport Minister Noel Dempsey said the increased tax revenue could be used to fund new roads.

“The new system means if you have a car, it has to be taxed. It will require legislation,” he added.

Irish Independent

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