Car tax changes push up prices 7%

THE revision of the vehicle registration tax band downwards to include all vehicles over 1900cc means two-litre cars will cost consumers 7% more.

The industry had demanded a derogation on the proposal until next March because dealers had already ordered their stock for next year.

“It is obviously going to be a lot more difficult for people to sell those cars,” the chief executive of the Society of the Irish Motor Industry, Cyril McHugh said last night.

Mr McHugh said it was particularly disappointing for the industry that the Minister had chosen this time to introduce the VRT change, especially as the EU was currently trying to persuade member states to abandon VRT altogether. “It is very disappointing considering that fact,” Mr McHugh said, adding: “not to mention that the Minister now considers two litre cars to be a luxury item.”

He said the revision of the VRT band meant some people would reconsider their purchases and some would actually move up to 2.2 or 2.4 litre cars, while others would buy smaller-engined cars.

“This presents difficulties for the industry again in terms of ordering for the future because they are working in a vacuum and don’t know which way the market will go.”

Mr McHugh said he was not particularly surprised at the increase of three cent on a litre of diesel. He added that the society was glad the minister resisted the temptation to increase excise rates on petrol. The base VAT rate increase to 13.5% would also affect the cost of servicing cars, he said.