BUDGET 2021 INCREASES TAX ON CARS
Published on 14th October 2020 at 09:10
Budget implications for the Motor Industry
Budget 2021, announced this afternoon by Minister for Finance Paschal Donohoe, and Minister for Public Expenditure and Reform Michael McGrath contains a number of measures specific to motoring:
- With the full implementation of the new emissions testing system, WLTP, from January next a new structure of rates and bands for VRT and motor tax. This new structure sees an increase in the number of VRT Bands to 20, with a wider gap between the highest and lowest VRT rate (7% to 37%).
- To create a level playing field between new cars and used imports, which have been subject to different emissions tests, used imports subject to the old emissions test will have their CO2 values uplifted to a level equivalent with the WLTP test to which all new cars are subject.
- VRT reliefs for Plug-in Hybrid Electric Vehicles and hybrids will be allowed to expire having regard to the fact that there will now be much lower VRT rates for low emission cars.
- Taper relief for Battery Electric Vehicles. It should be noted that the changes to the VRT rates and bands compensates for the changes to these reliefs.
- Following on from its introduction in last year’s Budget, adjustment of the Nitrogen Oxide (also known as NOx) surcharge bands so that higher NOx emitting vehicles will pay more.
- Motor Tax rates will remain unchanged for all cars in the engine sized regime and all but the most pollutant cars in the post-2008 regime.
- A third Motor Tax table for cars registered from the 1st of January next year to take account of the introduction of the WLTP emissions test.
Commenting on Budget 2021, SIMI Director General Brian Cooke
“In the context of the current economic climate, COVID, BREXIT and an already depressed new car market, the Industry is disappointed with the increase in VRT announced in Budget 2021. Overall, the changes to the VRT system result in an average €1,000 increase on the price of a new family car. This will make the new car market even more challenging for next year, reducing demand and slowing down the replacement of the oldest cars in the national fleet with newer lower emitting cars, which in turn will make it more difficult to drive down emissions”