Green drivers to feel tax pain

Motorists who signed up to the green agenda and low emission cars have been hit the hardest in Budget 2012.

Drivers will also have to fork out an extra 1.4 cent per litre of petrol and 1.6 cent for diesel at the pumps from midnight – jumping to four cent with the New Year VAT rise.

Finance Minister Michael Noonan said increases in motor tax, 60% in some cases from January 1, will generate €47m for the Exchequer – after a significant reduction in revenues when cheaper low emission cars flooded the market.

Taxing the cleanest Band A vehicle will jump from €56 to €160, with Band B up €69 to €225 and Band C up €28 to €330.

But an average 1.4 litre family car will cost just €27 more – to €384.

Green Party leader Eamon Ryan, who brought in lower rates for environmentally friendly cars, accused officials of pushing motorists back in to gas guzzlers.

“It’s regressive rather than progressive,” he said.

“It was helping Irish motorists save money and giving them cleaner machines. It looks like the Department of Finance doesn’t like that and are going back to the old days of big guzzlers.”

The AA’s Conor Faughnan said up to 70% of new car sales are now in Band A and Band B.

“This is going to feel like the worst sort of bad faith for drivers who bought new cars in the last three years and made the choice to buy clean and green,” he said.

Mr Faughnan said when the higher 23% VAT rate is added on to fuel in January, petrol and diesel will both become 4c per litre more expensive.

“That alone will add €6 a month in fuel costs for a modest family car and much more for many people. Families will be unable to spend that money elsewhere in the economy,” he added.

Fianna Fáil Environment Spokesperson Niall Collins described the move as a blow to responsible drivers and the environment.

"Michael Noonan’s announcements underline the lack of a climate change strategy by the Government,” Deputy Collins said.

"Around €1bn is collected in motor tax each year and this revenue raising method should be used to encourage environmental friendly car use, not simply treating motorists as a cash cow.”

The Coach Tourism & Transport Council of Ireland (CTTC) claimed fuel price hikes – coupled VAT increases – is another nail to the coffin of the coach tourism sector.

Gerry Mullins, chief executive, said diesel has jumped up 46% since 2008.

“When our costs are increased, we lose visitors to Britain and other areas,” he said.

“And when coach companies lose, then so do hotels, restaurants and tourist attractions. These losses are not factored in when the gains from fuel increases are being considered.”

However, Environment Minister Phil Hogan claimed there were still environmental incentives to purchase cars with lower emissions levels.

“The restructuring of motor tax in July 2008 to base it on CO2 emissions for all cars first registered from that date has brought a welcome shift to lower emitting cars,” he said.

“It has also reduced the total amount being collected, and this trend will continue as a larger proportion of car owners pay motor tax based on C02 emissions.

“In current financial circumstances, we must prevent the erosion of an important part of the tax base.”