Donal Hickey: What will the government do when we all switch to electric cars

If the target of having one million electric vehicles on our roads by 2030 is reached, the state’s coffers stand to lose €1.5bn
Donal Hickey: What will the government do when we all switch to electric cars

New electric vehicle and hybrid vehicle purchases accounted for 33% of car sales in the first five months of this year.

Politicians often mention the importance of listening to the so-called man, or woman, on the street as a barometer of how people are thinking. Opinion polls are not always needed.

The other day, I was buttonholed on the street by a man who was clearly bothered by just one issue: “What’s the Government going to do for tax revenue (from vehicle fuel) if everyone switches to electric cars?,’’ he asked.

At present, motorists are paying around 60% tax on petrol and diesel at the pumps. If the target of having one million electric vehicles (EVs) on our roads by 2030 is reached, the state’s coffers stand to lose €1.5bn in takings from motor tax, VAT and fuel tax, according to a Department of Finance review paper.

The paper also mentions “significant Exchequer revenue risk’’ due to the electrification of the national fleet. A query to the department elicited a reply in that vein, mentioning a long-term risk to tax inflows from the necessary move away from fossil fuels.

But the mandarins are thinking all the time. A department spokesperson said there’s an ongoing process of research and analysis on how best to manage the transition. In other words, they’ll find alternative sources of taxation.

Meanwhile, sales of EVs continue to grow. New EV and hybrid vehicle purchases accounted for 33% of car sales in the first five months of this year, compared to 19% in the same period last year.

At present, there are about 45,000 EVs on our roads. The change is certainly underway, with car dealers reporting more and more calls from likely purchasers.

These cars are currently more expensive to buy than petrol or diesel models. Experts, however, believe the cost will fall in the coming years and, in time, EVs should cost around the same as traditionally-fuelled cars.

The savings are, of course, in the running costs. You can now charge such a car overnight for around €6, giving a range of more than 400km. The price of less than four litres of petrol!

Most new EVs have a range of 300km to 400km on a single charge. Many owners charge their cars at home and it usually takes all night to charge fully in this way.

While the idea behind the promotion of these vehicles is that they are better for the environment, concerns are being voiced, for instance, about the mining of raw materials for lithium batteries and the recycling of components.

Meanwhile, the Commission on Taxation is due to report to Finance Minister Paschal Donohoe, no later than July 1, 2022, and, we’re told, its findings will inform future vehicle tax policy. The ever-vigilant man on the street will be watching.

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