Monday 23 October 2017

Budget tax hikes revealed

VRT and road tax are both set to rise significantly next year. Martin Brennan looks at just what's in store for drivers

MOTORISTS will be hit with higher vehicle registration tax (VRT) in the forthcoming Budget and the cost of road tax will also increase. The Sunday Independent has information on the Government's paper on VRT, marked "final paper", and we can reveal the exact extent of the increases that are on the way.

The registration year will also definitely be split into two, with the numbers 131 on cars registered in the first six months of next year and 132 on cars registered from July to December.

In broad terms, across a range of cars, the new VRT rate will mean increases ranging from €220 to €900-plus on the top-end models -- an average three per cent increase, taking €22,000 as the average price of a new car.

The VRT is based on C02 emissions -- so the cleaner or "greener" the car, the less punitive will be the increase, as under the new rules the bands have been broken into sub-categories to allow the Government to up its take on the more powerful and expensive models.

Band A now has four categories, with A1 covering cars in the 0g/km-80g/km emission bracket. Here the 14 per cent VRT remains unchanged, but this category covers electric vehicles which sell in very small numbers.

Band A2 (81g/km-100g/km) sees VRT rise to 15 per cent, which will add €220 to the price of a newly registered car (price average €22,000 used as a guide) when the new rules come into force, possibly from the end of the year.

Band A3 (101g/km-110g/km) rises to 16 per cent, an extra €440 on the purchase price; while Band A4 (110g/km -120g/km) goes up to 17 per cent -- an extra €660 cost to the purchaser.

In Band B, where VRT was at 16 per cent, the increases are steeper. Cars in the 121g/km-130g/km emission bracket face a tax jump to 18 per cent -- a €440 increase. The 131g/km-140g/km category is up to 19 per cent, which, depending on the model, will add an extra €660 to next year's purchase price.

Bands A and B account for about 90 per cent of annual car sales on the Irish market.

Bigger, more expensive models valued at €30,000 and more, which come into Band C (141g/km-154g/km) are seeing the tax take go from 20 per cent to 23 per cent, or €900.

But there is some good news from within the motor industry. Ford will have a 1.6-litre diesel model with stop-start technology and VW will be introducing a Golf with BlueMotion energy-saving technology -- both of which are expected to fall into Band A2, which attracts just one extra percentage point over current 14 per cent rate. Other manufacturers are also pushing down emissions and raising fuel savings with new generation diesel and three- cylinder petrol engines which will help to offset any future tax increases.

The annual road tax bill is also set to increase. No official figures have been released, but insiders in the motor industry predicting that the increase will average between €300 and €400, with some of the biggest increases from Band A4 upwards.

Indo Motoring

Also in Life