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Six changes the government are considering for Budget 2020

A number of changes to the Tax system are being considered as options for Budget 2020 writes Geraldine Herbert

The Department of Finance has published the Budget 2020 Tax Strategy Group Papers offering some insights into possible changes to the Motor tax system in the next budget

  1. VRT Bands – It is suggested that the rate gap between each of the motor tax bands could be widened and a new 7% VRT tax band would be introduced for vehicles with emissions of 50g/km of below and an 8% rate for those that fall between 51g/km and 80g/km. In addition, the current 11 bands would increase to 14 with a new top rate of 39% applied to all vehicles with emissions over 200g/km.
  2. 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. It is expected that January 2020 will be the first month that all new vehicles will be measured using full WLTP standards but the paper is advising that this date be pushed out to July 2020.
  3. Motor tax on Imports – Regardless of when the full WLTP standard is applied, it is likely all imported cars will be hit with higher motor tax. The paper recommends various ways that the CO2 figure on used imports could be readjusted to bring it into line with the WLTP figure.
  4. End of relief for hybrids – At present, hybrids, plug-in hybrids and electric cars benefit from VRT relief ranging from €1,500 to €5,000. However, the strategy paper proposes that relief on hybrids of €1,500 would be discontinued. The current system is due to remain in place until 31 December 2019.
  5. 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.
  6. An Environmental health charge – A final suggestion is that tax should be levied on non-CO2 pollutants and to this end an environmental health charge should be considered on the more polluting vehicles to replace the current 1% diesel surcharge. This might work for example to target NOX emissions on a per mg/km basis and would be applied to new cars and used imports.

Geraldine Herbert
18th July 2019

Author: Geraldine Herbert

Contributing Editor and Motoring Columnist for the Sunday Independent and editor of wheelsforwomen. Geraldine is also a regular contributor to Good Housekeeping (UK) and to RTÉ Radio One, Newstalk, TodayFM and BBC Radio. You can follow Geraldine on Twitter at @GerHerbert1

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1 Comment

  1. Rowing back on incentives for full electric vehicles at this stage is crazy given the fact that 90% of them are over the €40k mark..

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