Monday 16 July 2018

Colm McCarthy: Electric car incentives face rocky road

The whole system of Government revenue from road transport needs an overhaul, writes Colm McCarthy

PIONEERING: Elon Musk has led the charge towards electric cars with his range at Tesla. Photo: Bloomberg via Getty Images
PIONEERING: Elon Musk has led the charge towards electric cars with his range at Tesla. Photo: Bloomberg via Getty Images
Colm McCarthy

Colm McCarthy

If the Government persists in encouraging the switch to electric cars they will need to move beyond aspirational targets - they will have to get serious about the manner in which motoring is taxed and the economic and social road system costs recovered from users.

The Exchequer relies heavily on revenue from motoring in the form of purchase taxes, fuel taxes, annual taxes on vehicle ownership and road tolls. But there is a subsidy instead of a tax on electric car purchases, the fuel tax is avoided (electricity is even free at some charging points), there are discounts on annual taxes, reduced tolls and relief from benefit-in-kind tax for electric company cars. These policies should be seen as a publicity-seeking special offer designed to bring the new electric car option to public attention, rather like the once-only inducements to switch your credit card provider. If the policy succeeds it cannot be continued.

There are only 4,000 electric cars in Ireland but the Government is cheerfully targeting 500,000 (out of a national total of about two million) by 2030. If this figure is achieved, the current reliance on motoring taxes will become unsustainable. There is no shortage of confident predictions that all road vehicles, including trucks and buses, will be electric as early as 2040. Last year, the government of Denmark withdrew its generous tax deal on electric cars because it began to succeed.

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