A number of changes to the Tax system are being considered as options for Budget 2021 writes Geraldine Herbert
The Department of Finance has published the Budget 2021 Tax Strategy Group Papers offering some insights into possible changes to the Motor tax system in the next budget
- VRT Bands – It is suggested that a new 7% VRT tax band would be introduced for vehicles with emissions of 50g/km of below and a 9% rate for those that fall between 51g/km and 80g/km. In addition, the current 11 bands would increase to 20 with a new top rate of 39% applied to all vehicles with emissions over 191g/km.
- WLTP – In September 2017 a new stricter regime for testing fuel efficiency and CO2 emission was introduced. Known as the Worldwide Harmonised Light Vehicles Test Procedure – or WLTP for short it replaced the previous testing process, the New European Driving Cycle or NEDC. A transition period has allowed for both the new WLTP figures and NEDC-correlated figures to be quoted for all new cars but only the NEDC is used for motor tax purposes. January 2021 will see the full implementation of the WLTP so a new motor tax system may be introduced on all cars registered from the 1st of January 2021.
- Increase in the Nox charge – A change to the bands of the NOX charge may be made meaning that the lower €5 rate per mg/km would only apply to the first 40mg/km and not up to 60mg/km as it is currently. This applies to all cars when first registered, i.e. new cars and imports.
- Scrappage Scheme – An electric car scrappage scheme is not advised by the strategy group.
- Electric Car Relief Limit – Changes are also being proposed to VRT relief on fully electric vehicles, the €5,000 tax relief would only apply to cars of €40,000 or less after which it would be reduced at a rate of 50 per cent per €1, with no relief available for cars priced over €50,000.
- Increase in Diesel prices – A number of countries have moved to equalise the excise rate on petrol and diesel. The excise on Diesel in Ireland is currently 11.6 cents per litre less than that on petrol. It is proposed to phase this out over five years.
- Motor Tax reduction – It proposes that motor tax for electric cars is reduced from €120 to €100
Geraldine Herbert
15th September 2020
