Shock for motorists as car tax soars 12%

Motorists faced their second hike in prices this week as the Government authorised a steep rise in motor tax today.

From January 1, tax rates on all vehicles will be increased by 12%, Environment Minister Martin Cullen confirmed.

The change marked the biggest single rise in the tax for a decade and followed the imposition of higher prices for diesel fuel and vehicle registration tax for the most popular range of cars in Wednesday’s budget statement by Finance Minister Charlie McCreevy.

The latest change will put up the annual motor tax for an average size family car by around €30 to €278. Drivers of bigger cars will face greater increases.

The Government insisted the increase would go towards improving the road network.

Mr Cullen said: “I want to keep the money in funding for roads, and I am not prepared to see any slippage in that.

“This money is going directly into the Government fund for non-national roads and will bring in about €67m over the year.

“I think this is a very important move to ensure motorists get the best value from the roads around the country.”

But the Society of the Irish Motor Industry claimed the car tax rises were “savage.”

Chief executive Cyril McHugh said: “The motorist in Ireland already pays more than four million euros a year in taxation, and this kind of a hike is horrendous.

“Motor taxation should be ring-fenced for road development and improvements, but that has not been the case up to now.

“I think the motor car has historically been regarded as a luxury, but it is now a necessity in everybody’s lives. We have to get a change of attitude from the Government.”

Labour opposition party frontbencher Eamon Gilmore said the move was another part of this week’s budget, and claimed: “It is another stealth tax.”

:: Economists said the motor tax rises, together with the budget changes, would further hinder Government efforts to keep down the Irish rate of inflation – at 4.6% already the highest in the European Union.

Estimates before the move on the motoring front were that the price rise rate could soar to around 6% early next year.