Thursday, 7 December 2006

Motoring into the Green Lane?

We are to be consulted on the switch to cleaner cars:

"The decisions in today's Budget (6th December '06) to radically alter Vehicle Registration Tax, Motor Tax and the introduction of vehicle labeling represent one of the most progressive environmental measures to be introduced in recent years," stated Mr. Dick Roche, T.D., Minister for the Environment, Heritage and Local Government

"In moving towards a more CO2 emissions based motor tax system and in line with the Programme for Government, I want to provide an incentive through the motor tax system for the motoring public to drive cleaner cars.

"I am proposing a system under which CO2 emission ratings for individual vehicles will, in addition to the normal engine cc value, be used for the calculation of motor tax. This will apply to any new or pre-owned imported vehicle, registered in this country on or after 1 January, 2008 and taxed within the 'Private Car' motor tax class, which make up about 75% of vehicles registered each year," stated Minister Roche.

Ireland has successfully stabilized, and has been able to reduce its emissions since 2001. Within this overall trend, however, emissions from the transport sector have continued to grow. Transport is the third largest contributor to national greenhouse gas emissions, accounting for 18% of the total emissions in 2004. Road transport accounts for 96% of transport emissions. As the average engine size of vehicles purchased in Ireland has increased in line with increases in disposable income, the benefits of increased fuel efficiency from technological improvements has been lessened.

"This initiative in relation to motor tax, together with proposals by the Minister for Finance to rebalance VRT, announced in the Budget, will provide an additional signal to people that there are substantial costs associated with buying new cars with higher CO2 emissions, and its objective is to provide an incentive for consumers to purchase cars that are more CO2 efficient". Both the VRT and Motor Tax initiatives will be supported by an improved mandatory vehicle labeling system to inform consumer choice.

It is projected that the overall motor tax income for 2006 will be €870 million compared with €802 million in 2005. Motor tax revenue is a critical source of current funding for local authorities. Together with an Exchequer contribution, it is ring-fenced within the Local Government Fund, which is used to support investment in non-national roads and provide general purpose current funding for local authorities. Overall, the Local Government Fund meets some 30% of local government current spending annually, and motor tax accounts for some 60% of the Fund.

"My proposals are to 'rebalance' motor tax payments in favour of cars with lower CO2 emission levels, at the expense of vehicles with high emission levels and without any overall loss of motor tax revenue" added Minister Roche.

The Minister concluded: "Cars which are registered prior to 1 January, 2008 will continue to be taxed in accordance with current arrangements and CO2 ratings will not apply to these vehicles".

An extensive publicity campaign to inform the motoring public of the benefits from a motor tax perspective of purchasing low emission new cars will be undertaken prior to revised tax rates coming into operation. The Minister wishes to provide an incentive through the motor tax system for the motoring public to drive cleaner cars and, at the same time, to impose penalties in respect of cars with higher CO2 emission levels.

The Minister is now inviting interested parties to make submissions in relation to the rebalancing of annual motor tax. The public consultation paper is available on under motor tax.

Submissions may be emailed to or posted to:
'Motor Tax Consultation',
Motor Tax Policy Section,
Department of the Environment, Heritage and Local Government,
Custom House,
Dublin 1.

Submissions received will be published on the Department's website,

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