Call to make new cars affordable to more people by reducing Vehicle Registration Tax (VRT)
A body representing Longford car dealers is leading calls for a reduction in VRT rates ahead of next month's budget.
The Irish Car Carbon Reduction Alliance (ICCRA) is calling on the Minister for Finance, Paschal Donohoe TD to make new cars affordable to more people by reducing Vehicle Registration Tax (VRT) in the forthcoming budget, a move that would also help the Government reduce carbon emissions.
Ireland’s Vehicle Registration Tax (VRT) system must be revised in this year’s budget due to EU changes in emission testing. In its Budget 2021 submission published today the ICCRA state that this gives the Government an ideal opportunity to reform motor tax in a way that will encourage motorists to switch to greener cars, while also safeguarding the revenue base it requires to maintain Ireland’s road network.
“Current levels of VRT do not make sense for the economy or the environment,” says Michael Moore, ICCRA spokesperson.
“Ireland has the second highest new car taxation levels in the EU with excessive taxation moving the price of new cars beyond the affordability of most people. We are calling for an average €3,000 reduction in taxation on new cars. This would bring the average price of a new car close to the €30,000 level which caters to over 64% of the Irish new car market,” he added.
“Since 2016, new car prices in the Irish market have increased by €5,354, some 19%, to an average of €33,881 in 2020. During the same period, sales of new cars have fallen from 146,650 units to a predicted 85,000 units this year - a fall of 61,650 units (42% decline). The market for cars costing €35,000 or less has been hit hardest, plunging by 33% (40,397 units). New cars are becoming the privilege of the few.”
“The volume of new cars sold is also insufficient to create a proper second hand car market to satisfy consumer demand for two- and three-year old cars. This lack of supply is being met currently by used UK imports with poorer fuel efficiency than the equivalent new variant. We don’t know what impact Brexit will have on the supply of used cars from the UK– whether they will still be available or at a minimum severely restricted. However, by reducing VRT, the Government can help to make the Irish market more self-sufficient and greener by stimulating new car demand and boosting the “home grown” used car market.”