Increasing vehicle registration tax (VRT) rates by 1 percent is one of the budget proposals presented by the Ministry of Finance's Tax Strategy Group (TSG) in its recent documents.
The document states that if the measure is implemented for the top VRT categories – 11 to 20, covering the prices of new and imported used cars – it would “only affect vehicles with above-average emissions” and could generate €28 million based on registrations in 2024.
The group also proposes to increase the NOx emissions tax on new and imported cars by €5 per mg/km, which could bring in an additional €15.5 million.
With regard to the tax on benefits in kind (BIK), the document proposes the introduction of a new zero-emission category, the rates of which would range from 6 to 15 percent depending on the company's annual mileage.
For vans and light commercial vehicles with CO2 emissions above 260g/km, the Vehicle Revenue Tax (VRT) rate is also proposed to increase to 15%. This is above the recently introduced two-band VRT system, where the top tax rate is currently 13.3% for vehicles with emissions above 120g/km.
The expert group notes that future reforms could include emissions-based BIK rates for vans, potentially maintaining the current rate of 8 per cent for low-emission models, while also setting higher rates for models with CO2 emissions above a certain threshold.
The latest TSG document addresses a proposal put forward last year to introduce an additional surcharge on the VRT tariff depending on the weight of the vehicle.
Similar to the system in place in France and Norway, the extra charge would be levied on vehicles that exceed a set weight threshold, with potential exemptions for models such as fully electric or hybrid vehicles.
In a statement, TSG said: “There is a clear understanding that the scale of the proposed electrification of the national vehicle fleet will result in a significant risk to revenue, as the increase in the number of electric vehicles is expected to reduce revenues from vehicle tax, value added tax (VRT), VAT and fuel excise duties, particularly if the current tax structure remains unchanged.”
Revenues from taxes on fossil fuel use and related transport are projected to fall by €1 billion by 2030, down from €5.3 billion in 2022.
Sourse: breakingnews.ie
