The Government intends to adjust the CO2-based tax band for cars by 2013 as part of the National Recovery plan announced today.
The plan states that the introduction of emissions-based tax systems for vehicle registration tax and motor tax, introduced from July 1st, 2008, has encouraged people to purchase lower emissions cars. “However the change in purchasing patterns, combined with other factors, is having an impact on revenue yields, especially in the case of motor tax over the medium term,” the report claims.
Government income has fallen significantly on the back of a drop in sales since the tax changes, alongside the move to cleaner cars. So far this year, over 79 per cent of the 86,464 new cars sold during that period fall into the lowest two motor tax bands.
Tax revenue figures for last January, the busiest month of the year for new car sales, show that Vehicle Registration Tax (VRT) on the sale of new cars fell 8.3 per cent to €63.4 million.
The industry has made radical improvements in lowering emissions in new cars, with several leading premium models, now qualifying for the lower tax bands and thereby significantly reducing the tax income generated from their sale and through motor tax. For example, this year Audi is offering a €67,000 A7 four-door coupé that will cost €156 to tax – as will BMW’s 520d. The same is true of a new Mercedes-Benz E-Class E200 and E220 CDI.
