Budget 2013 Transport: Motorists face up to €126 hike in annual road tax

Motorists are facing increases of up to 25% in the annual cost of motor tax, with price increases ranging from €10-€126 coming into force from Jan 1 next.

The cost of new cars is also set to rise, with increases of up to 3% in Vehicle Registration Tax announced in Budget 2013.

However, motorists were spared further hardship when Finance Minister, Michael Noonan, confirmed there would be no increase in current excise duties on petrol or diesel.

On a more positive note, road hauliers were granted their long-standing demand for a fuel rebate scheme for diesel, which will come into effect from Jul 1 next.

In a measure to create a greater, year-round, car sales market, rather than the concentrated sales period between January and March, the Government is introducing a dual registration period.

From Jan 1, 2012, all new vehicles will carry a year tag of 131, with those registered after Jul 1 carrying a 132-reg plate.

The initiative is also seen as addressing some concerns within the motor industry that superstitious drivers would be reluctant to purchase vehicles with a 13-reg plate The expected increase in motor tax will raise an additional €100m in revenue next year.

The changes will also see a restructuring of the CO2 and VRT bands A and B — the most common bands for new vehicles.

From January, both bands will be split into sub-categories based on emission rates with higher rates for the new bands.

The changes will impact on all vehicle types covering the two pricing regimes for cars registered before and after Jul 1, 2008, with the exception of electric cars.

Motor tax will increase by 20% on average for cars based on emissions and by 7.5% on average for vehicles based on engine size.

Under the older tax scheme (based on engine size), an average family car will see its annual motor tax bill increase by €36 to €514 per annum. Under the emission scheme, the rate for a B band model will jump €55 to €280.

Environment Minister Phil Hogan said the changes to motor tax were the results of a comprehensive review of motor tax bands and were designed to prevent the further erosion of an important source of tax revenue.

The Government was concerned revenue was constantly falling due to lower tax rates on new, low-emission cars bought after 2008, with more than half of all new cars sold in 2012 falling into the cheapest A band. Over 92% of all vehicles are in the A and B bands.

Mr Hogan said overall motor tax revenue could have fallen by 40% once older cars were replaced by those taxed on emissions without the latest motor tax rate increases.

Increases in VRT which also come into effect from Jan 1, are expected to raise an extra €50m in revenue.

The structure for charging VRT has also changed to coincide with the changes to motor tax through the splitting of A and B bands.

Last night, the AA said the cost of living for motorists would increase as a result of the budget, although it welcomed the decision not to increase fuel tax which it described as “a victory for common sense”.

“However it simply doesn’t take away from the fact that we’re still facing all-time record highs for fuel prices because of the six fuel tax increases that have been applied in the last five years,” said AA spokesman Conor Faughnan.

The AA welcomed the change to registration plates but stressed it would have little effect on consumers.

Road hauliers welcomed the fuel rebate scheme which will cost the Government €70m per annum as a measure to boost exports and reduce the illegal trade in laundered diesel.

However, private bus operators expressed disappointment that similar rebates were not being made available to the passenger transport sector. The Coach Tourism and Transport Council said bus and coach firms would now pay 40% more for fuel than hauliers.

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