The Measures

Friday 25 July 2014

Drivers of older cars will take a hit but motorists are at least spared petrol hike

Eddie Cunningham and Treacy Hogan

Published 06/12/2012|05:00

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HARD-pressed motorists with older cars face huge new bills for motor tax from next month.

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Owners with cars whose road tax is calculated on engine size – four-in-five of all vehicles – face increases of up to €126 a year. At the same time, those whose cars are taxed on emissions – those registered since July 2008 – will be hit with the steepest rate increases.

They are being hit by increases of up to €40 a year – a 25pc hike – but they will still pay less than those with older cars.

As revealed in the Irish Independent earlier this week, motor tax on the average family car will climb to more than €500 for the first time.

For the most common family car, a 1.6-litre engine, there will be a jump from €478 to €514, an increase of 7.5pc.

Those with two-litre engines will fork out an extra €50, with their annual cost increasing from €660 to €710.

But the biggest increase in car tax is reserved for owners of pre-2008, three-litre models, as this rises by €126 from €1,683 to €1,809.

But with petrol and diesel prices soaring over the past few months, the Government decided not to raise excise duty or increase carbon taxes on these fuels. The motor tax changes, however, were considered necessary, as the introduction by the previous administration of an emissions-based system led to a massive shortfall.

This gap between the old engine-size system and new emissions system is now being bridged, but it is still far cheaper to tax a car with low emissions. Many newer, so-called luxury cars actually have smaller emissions than older models with smaller engines.

The Government hopes to raise an extra €86m in road tax and €50m in Vehicle Registration Tax (VRT).

The rates of both VRT and motor tax across all categories will increase from January 1.

The VRT hikes mean there will be relatively small increases in the price of most family cars but several manufacturers have absorbed the hikes for next year. The rates still range from 14pc to 36pc, but the VRT bands, which are now based on levels of exhaust emissions, now involve extra bands.

Registrations

As also revealed by the Irish Independent, there will be two new car registration periods next year.

Registrations from January to the end of June will be '131' and from July 1 to December 31 will have a '132' number plate.

SIMI chief Alan Nolan said the tax and VRT increases were expected – but unfair in that motorists were hit on the double. "The road tax is unfortunate in that those who bought green are being hit harder."

He said it was also a missed opportunity to create jobs.

The €50m the Exchequer will get from increased VRT next year could have been generated by sales of 6,000 extra cars.

A new car sale rakes in about €7,700 in VAT and VRT.

Selling 6,000 additional cars would have created employment for 800 people.

Irish Independent Supplement

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