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Motorists face triple whammy of hikes in tax, tolls and petrol

Hikes in motor tax, fuel costs and new motorway tolls are among a range of measures in the pipeline that will affect already hard-pressed motorists.

Drivers can expect to pay more to tax their car from early next year because of the impact that greener cars are having on the State's coffers.

A review of the motor tax system is expected to result in a new band for the most efficient cars, with increases across the board in the existing bands.

The hikes are expected to be announced in December and come as motorists face record petrol prices, the prospect of more motorway tolls and an increase in carbon tax.

The price of a litre of petrol, which is currently around €1.53, is expected to rise by at least 2pc when the carbon tax is increased in December from €15 per tonne to €25.

The Government is also considering a raft of motorway tolls to help generate new sources of revenue.

The review of motor tax rates comes after the introduction of a system in January 2009 -- for new cars only -- which rewarded drivers of more fuel-efficient and less-polluting vehicles.

Under the new system, instead of taxing new cars based on engine size, as is the case for those bought before July 2008, they are now charged between €104 and €2,100 a year on the basis of how much carbon dioxide they emit.

But the changes, along with a sharp drop in car sales, have resulted in the Exchequer taking a €650m hit. Figures from the Department of Finance show that, in 2008, the State took in over €1bn on vehicle registration tax charged on new cars. This has fallen to €380m.

Meanwhile, other motor tax payments amounted to €953m last year, a dip of €30m due to people switching to more efficient vehicles.

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Motor tax is paid to local authorities to help run essential services and pay for road improvements. Unless the shortfall is made up, householders can expect to see a cut in services.

Officials are considering introducing a new 'lower' band to reward drivers of the most efficient cars, but a hike across all tax bands is also likely.

The Department of Finance has committed to reviewing and adjusting bands and plans before 2013, but sources said changes could be introduced in December's Budget. A spokesman for Environment Minister Phil Hogan said "all options" would be considered.

The Consumers' Association of Ireland said motorists were being unfairly targeted.

"The motorist is always a target," chief executive Dermott Jewell told the Irish Independent. "The roads are in a disastrous state, and what are we going to get for our money? The Government should put a ceiling on tax so where fuel is at €1.30 per litre or above, VAT would not be imposed, which would give some benefit."

The AA, meanwhile, said most countries had a 'polluter pays' motor tax regime, which was forcing manufacturers to make more efficient cars.

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