Finance Minister Michael Noonan plans on simplifying the rates of commercial motor tax by replacing the existing 20 rates with just five rates ranging from €92 to €900.
This will come into effect from January 1, 2016.
The changes are set to benefit operators of about 28,500 commercial vehicles.
“Road tax for large goods vehicles in Ireland is too high by comparison with the regime applying in Northern Ireland and the rest of the UK,” said Mr Noonan in the Dáil. “This is causing distortions in the haulage industry and increasing costs across the economy.”
The finance minister stressed that the changes were temporary as the regime would eventually be changed to one based on the gross design vehicle weight of the goods vehicles.
The president of the Irish Road Haulage Association, Verona Murphy, said the industry would breath a sigh of relief that the system was being overhauled.
“We have been seeking an overhaul of road tax for heavy goods vehicles for countless years as the legislation was draconian and hampered a progressive approach to business as a result of the exorbitant charges,” she said.
Neil McDonnell, general manager of the Freight Transport Association of Ireland, said the move takes commercial vehicle motor tax here, which was the highest in the OECD, below its British equivalent.
“While we campaigned for the abolition of commercial motor tax in favour of a road charge, we welcome Minister Noonan’s announcement of a significant reduction.
“This will improve the cost of doing business in Ireland. It takes Irish commercial vehicle motor tax below that of the UK, and the minister has signalled that this is a prelude to changing the basis of assessment to gross vehicle weight in 2016,” he said.