Budget 2020 Gives Motor Industry Breathing Space

Budget 2020, announced this afternoon by Minister for Finance Paschal Donohoe, contains a number of measures specific to motoring:

• No changes to CO2 element of VRT in 2020. VRT will continue to be based on NEDC for 2020.
• Replacement of 1 per cent diesel surcharge with a nitrogen oxide (NOx) emissions based charge. This surcharge will apply to all passenger cars registered for the first time in the State from 1 January 2020.
• Extend the Benefit-In-Kind zero rate on electric vehicles to 2022;
• Extend VRT reliefs for conventional and plug in hybrids to 2020, subject to CO2 thresholds;
• Provide additional relief through the Diesel Rebate Scheme to hauliers to compensate that sector for the increased cost of fuel; and
• Increase of the carbon levy on motor fuels of €6, adding €2 for a tank full of either petrol or diesel. This will increase the cost of doing business in Ireland.
• Introduce an environmental rationale for Benefit In Kind for commercial vehicles from 2023;
• Reduce qualifying CO2 thresholds for reliefs in respect of Capital Allowances and VAT reclaim on commercial vehicles;

Commenting on Budget 2020, SIMI Director General Brian Cooke 
“In the context of both an already depressed new car market and the likely impact of Brexit, there is a real fear that car sales will further deteriorate that will only slow down the renewal of Ireland’s car fleet, which is vital in our attempt to drive down emissions. In this regard, SIMI is relieved that the Minister has not increased VRT for new cars in Budget 2020.

The replacement of the 1% diesel surcharge introduced last year on new cars with a nitrogen oxide (NOx) emissions-based charge to all passenger cars registering for the first time in the State from 1 January 2020 is a welcome announcement. The NOx charge will impact on older higher emitting cars which, unlike last year’s diesel surcharge, will penalise older cars with higher levels of pollutants. The Minister has recognised that newer vehicle technology is cleaner and better for the fleet.

In addition, the extension of the BIK relief for Electric Vehicles out to 2022 will incentivise the choice of electric cars for companies for the duration of the normal 3 year replacement cycle. This Budget does allow the Industry some breathing space in what is likely to be a challenging 2020. It is now important that the Industry and Government use this time to work closely together to in relation to VRT into the future and the drive towards zero-emissions.”