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vrt hike piles pressure on buyers and sellers

YOUR new car is going to cost more after the Budget when revised Vehicle Registration Tax (VRT) bands are introduced.

The revision will mean virtually every car on the market, except those with extremely low emissions, will be hit by percentage increases in their basic cost.

The Irish Independent can reveal that, under the proposed new cut-off points, many cars at the upper end of emissions, within existing Band A, for example, face a 3pc increase in their VRT (from 14pc to 17pc).

In some cases dealers will absorb some, or all, of the new increase to protect sales but in others it will not be possible.

The big outstanding question from which no one can be shielded, however, is how much road tax increases are going to impact.

It is believed that there is pressure to increase the tax in order to get a certain average amount from each car.

The historical difficulty here is that the emissions-based system rewarded, and rightly so I argue, cars with low emissions regardless of engine size.

Because manufacturers responded so quickly to the new system with greener vehicles and because sales generally fell as well, income plummeted. Now, to an extent, we are being punished for 'being good'.

One way or the other the road tax costs will follow the same trend as the VRT bands -- upwards.

And all of that means motorists are looking at significant increases in both purchase and running costs. Added to high fuel prices, there is no doubt the Government is taking every cent it can from motorists (who, of course, are also paying a huge swathe of other taxes and charges).

The whole issue of road tax is dangerous territory for all concerned. One wishes one could ask for it to be left alone, but the reality is there will be some sort of increase.

However, until a certain percentage of people know what their road tax bills are going to be they will not commit to buying a new car. And that creates unease across the industry because dealers don't really know what to order in advance. Or what to tell people who ask.

Do not underestimate how seriously people take the road tax element. I can categorically state that it is one of the most frequently asked questions by potential buyers in showrooms.

So you can imagine how an indefinite answer to such a query could put off some customers. That, unfortunately, is where many sales people now find themselves. At a crossroads. Just like the country.

Indo Motoring