Emissions replace engine size in language of VRT
It’s widely expected that sales of diesel cars will soar with the new VRT scheme because of their lower emissions.
According to the Green Party, more than half of new cars sold should have their VRT rates cut under the new scheme, adding that anyone buying a 1.4 litre diesel car will see their VRT bill drop by €1,500 while luxury SUVs will face increases of between €1,000-5,600.
In his Budget yesterday, Finance Minister Brian Cowen announced a revised VRT tax system where new cars will now be taxed on their CO2 (Carbon dioxide) emissions rather than their engine size. The Department of Finance is hoping this turnaround will mean drivers will actively seek to buy more eco-friendly cars.
It was also revealed that the annual motor tax bill will be increasing for all motorists, with rises of up to 9.5% for all cars with an engine size below 2.5 litres and 11% for larger cars. This change begins in February.
This will mean rises such as €22 for a car between 1,001cc and 1,100cc; €28 for a 1,301-1,400cc car; €39 for a €1,601-1,700cc car, €51 for a €1,901-2,000cc car, and €78 for a 2,401-2,500 cc car.
Under the new VRT scheme, new cars will now be graded from A to G, with A cars being taxed at 14% while G cars will be hit by a 36% levy on top of the cost of the new car. An A car is one with CO2 emissions of less than 120g while a G car has emissions of 226g or over.
The new car-labelling system is something similar to the rating system used for white electrical goods, with the most energy efficient freezers, dishwashers and refrigerators being given an A rating. Mr Cowen described the move as a “re-balancing” of the VRT system and “the biggest change since 1993”.
At present, purchasers of hybrid and flexi-fuel cars can avail of a 50% VRT rebate. This scheme will continue until the end of June and from thereon, they will get an exemption of up to €2,500 on their VRT bill which will be based on the new emissions grading scheme. From January, there will be no VRT payable on battery run cars or bicycles.
Last night, Society of the Irish Motor Industry chief executive Cyril McHugh welcomed the changes to the VRT system saying the motor industry are spending billions into reducing CO2 emissions.
“I think we will see a shift to diesel cars from the middle of next year. Just 20% of our new car sales are diesel cars compared to 70% of the market in Germany and Austria. People will now certainly look more carefully at their car’s emissions,” he said. He however described the increases in motor tax as “disgraceful” saying the money should have been ring-fenced for “the improvement of non-national roads or something specific”.
Fine Gael transport spokesman Richard Bruton described the new VRT scheme was ” a welcome if belated move”.
Mr Bruton questioned the Government’s commitment to sustainable living asking: “Why was a dysfunctional development strategy pursued for so long that ignored the impact of long commuting and allowed a housing stock be built whose emissions per house are 97% higher than the European Union 15 — even after adjusting for differences in climate?” he said.
A Green Party spokeswoman said the new VRT system was “good for the environment and good for people’s pockets”.
