Hiking VRT on diesel engines makes absolutely no sense
The decision to impose a 1pc VRT surcharge on diesel cars is probably the worst option the Government could have taken. It doesn't make sense on several fronts and smacks of a last-minute sop.
For a start, increasing the price of new diesels is going to make 'dirtier' second-hand imports more attractive on price (even though they will be charged the 1pc too, but it will be on much lower amounts obviously). That means there could be more heavier-polluting cars on our roads (there we were thinking the whole idea was to reduce their numbers).
As well as that, the Exchequer will lose out on income because taxes are lower on imports than on new cars.
It appears - again - that people have forgotten a simple fact. Diesels emit lower levels of CO2 than petrol.
That's why we were encouraged to buy them when we switched to an emissions-based taxation system in the 2008 Budget.
The main criticism of diesel is that it emits higher levels of health-endangering NOx. But that is a different debate to the one about pumping less carbon into the atmosphere -for which the greenest diesels ever made are now going to be punished.
The vast majority of new diesel cars fall into the 16pc-18pc VRT brackets under the current system. Adding the 1pc surcharge will mean an increase of around €400 to the price of a typical €30,000 family motor. That is on top of an extra €400 or so on the price anyway, thanks to the tougher new emissions-testing regime which is raising CO2 readings by 7pc-10pc and putting a lot of cars into higher VRT bands.
The other thing is that diesel buying is falling quickly anyway. Without anyone doing anything, sales have gone from 70pc of total market in 2015 down to a projected 54pc this year. There is no doubt in anyone's mind the figure will fall well below 50pc next year.
But the reality remains for many people: they need diesel for its economical fuel consumption. That's especially true in rural Ireland, where there are few alternatives.
The prospect of having to pay an extra €400 in VRT will doubtless mean many people will stay with what they have for now - keeping more older cars on the road. But it will also mean the gap in the value of a car being traded in against a new one will be even wider.
This Budget measure may stop some people buying new diesels. But with cheaper second-hand alternatives just up the road, it won't stop people buying diesel.