Irish News

Wednesday 20 August 2014

Change in tax laws fuelling 'greener' car trade

Paul Melia and Ed Carty

Published 17/12/2008 | 00:00

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IRISH motorists are choosing to buy smaller, less polluting cars since a new motor tax regime came into force last summer.

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Sustainable Energy Ireland (SEI) yesterday revealed that 84pc of all new cars sold between July and October this year had smaller engines, compared with 41pc of total sales in 2007.

Although the number of new car sales is falling, the percentage of buyers choosing vehicles with smaller engines has risen because it is cheaper to tax and run them.

This is because a new system of assessing private cars for Vehicle Registration Tax (VRT) and annual road tax came into effect from July 2008.

Instead of charging motor tax based on engine size, the new system of seven 'bands' is based on the amount of carbon dioxide emitted per kilometre.

SEI said yesterday that the new taxation system has had a "dramatic effect", with data showing that the combined share of bands A and B -- payable for the least polluting vehicles -- had grown from 22.5pc for 2007, and 24.8pc to July 2008. But between July and October the share increased to 59pc of new registrations.

The combined bands A, B and C accounted for 84pc of registrations compared with 41pc of registrations in 2007.

Sales of larger cars in bands E, F and G were 33.4pc in 2007 and 28.7pc up to July this year, after which they fell sharply to account for just 6.1pc of new car sales.

SEI noted that the figures represented just four months data, adding that sales of new cars -- particularly larger, more expensive models -- fell during 2008.

"A large increase in the share of sales of the higher emitting cars in the period up to the change to the new taxation system had been expected to occur," the report noted. "But this doesn't appear to have happened. In fact, the shares of the three largest emitting bands were down slightly."

Impact

A spokesman for the Society of the Irish Motor Industry (SIMI) said: "That definitely has been the pattern. Although we would really need to see a full year, there's no doubt it has had an impact. The bottom line is these cars are cheaper than they were a year ago.''

The figures come as a new poll of over 5,000 motorists shows that one in five are planning to change their car next year.

Of the 5,300 people polled by the AA, 21pc said they would change their vehicle in the next 12 months.

Environment Minister John Gormley said the evidence showed that the switch to an environmental basis for VRT and motor tax is having a "real, measurable effect on car choice".

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