VRT tax is 'hindering' motorists from switching to newer, greener models

VRT tax is 'hindering' motorists from switching to newer, greener models

Car dealers in Ireland say VRT is creating an artificial demand for used imports.

The current level of tax on new cars is hindering motorists from switching to newer greener models, according to a report commissioned by the Irish Car Carbon Reduction Alliance (ICCRA).

ICCRA, which represents the majority of car dealers in Ireland, wants an independent expert review of the current motor taxation situation saying it wants to bring realistic ideas to the table that could aid the Government’s ambition to reduce the carbon footprint of the cars on Irish roads.

According to the report by economist, Colm McCarthy, the current level of vehicle registration tax (VRT) is not only reducing sales of new cars, but is having a detrimental impact on the used market by inhibiting the availability of two- and three-year-old models. 

This is creating an artificial demand for used imports, which Mr McCarthy said is being met with older UK models. He also said that with the current motor tax system, the Irish purchaser of a used UK vehicle, at a specific price point, is paying less tax to the Government, than a purchaser of new vehicles at the same price.

“The current system does not make sense for the economy or the environment. VRT is a dysfunctional tax," Denis Murphy, spokesperson for the ICCRA said. 

"New cars in 2021 with internal combustion engines (ICE) will emit 28% less CO2 than the average car currently on Irish roads, so for every car we replace with a newer cleaner car, we can achieve significant reductions. Motorists should be encouraged to purchase newer cars — it would be a win-win for everyone."

Under its climate action plan, the Government proposes to have 1m electric vehicles on Irish roads by 2030, while the sale of fossil-fuelled cars will be banned from that date. 

The ICCRA said that replacement of the car fleet with newer ICE models should not be discouraged prematurely. 

“Currently EVs [electric vehicles] are just 3.5% of new car sales. As manufacturers are working towards the EU’s emission target for 2040, electric cars will not be available in the quantity required to allow such a transition until late in this decade," Mr Murphy said.

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