Budget 2017 Motoring

Budget 2020 And The Motor Industry In Ireland

Budget 2017 Motoring
Budget 2020 is here: what's in it for the Irish motorist?

Thanks to SIMI for sharing the following information on Budget 2020.

Budget 2020 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.
  • Extension of the Benefit-In-Kind zero rate on electric vehicles to 2022.
  • Extension of the 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.
  • 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, said,
“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.”

SIMI has asked the Government for extreme caution with proposed changes to taxation

SIMI Comment On Taxation Changes Budget 2020

SIMI has asked the Government for extreme caution with proposed changes to taxation
SIMI has asked the Government for extreme caution with proposed changes to taxation in Budget 2020

Official comment from SIMI:

The Motor Industry and the motorist is facing the greatest change in taxation since 2009. The Industry is haunted by the taxation changes in 2009, which undermined both new and used car sales by being too ambitious and seeking to implement change too quickly. Overnight car values plummeted, new car sales declined and the Industry fell off a cliff. That together with a recession resulted in the closure of 150 family businesses, 14,700 job lost and over €1bn in lost revenue for the Exchequer.

The looming Budget 2020 brings a very concerning feeling of Déjà vu. The Society of the Irish Motor Industry (SIMI) continues to highlight the need for extreme caution in dealing with motor related taxation in the upcoming Budget, doubly so now that the Budget almost coincides with the Brexit date.

The Economic Statement issued by the Minister for Finance Paschal Donohoe yesterday outlined budgetary policy is not a one size fits all, and highlighted the huge difficulty in framing a Budget for next year.

Brian Cooke, SIMI Director General outlines the major concerns facing the Industry

“In this already fragile business environment for car retailers, it is vital that Budget 2020 recognises the importance of new cars; to the economy, in terms of local employment and in terms of tax revenues; and to the environment as the renewal of the Irish car fleet with new vehicles, is the only way to make a material and sustainable move to reducing emissions from the private car. Our Industry is very concerned and angry at the possibility of sleepwalking into another potential 2009.

The State must stop overburdening new cleaner cars with tax, while at the same time ignoring the problem of replacing older cars, which is where the real emissions problems lie. In fact, it’s even worse, the VRT system discriminates against new cars when compared to older used imports. It would appear from various publications that the new car is being lined up as the easy target as if new cars are the main issue. Newer cars have the most up-to-date emission technologies and are less environmentally damaging than older used cars. Uncertainty in the market leads to consumers holding onto their older car or importing an older car that is perceived to be good value.

With the full move to WLTP emissions testing on the horizon, Budget 2020 must make allowance for the difference between the new and old emission testing systems. Most other EU countries have followed the EU Commission view that consumers should not be faced with increased taxation due to the new emissions testing regime. Ireland should be no different. We should be selling 150,000 new cars each year, but with threats of Brexit this number has already fallen to 112,000. If a VRT increase is thrown into the mix for 2020, we will see a further fall; history, in particular 2009 tells us what can happen. 

Last week the Government’s Climate Action Plan proposed a transition to zero emission transport, which the Industry fully supports and is proactively engaged in rolling out cleaner technologies. However, it is important to note that this transition is not deliverable in the short-term, as it will take a number of years to achieve, longer than is proposed in the Plan. We require the right measures that focus on gradual change and include sensible policies aimed at encouraging motorist to make the right choices that can lead to clean, affordable and convenient mobility solutions. This can only be achieved by allowing the new car market to flourish in 2020, which has clear environmental and economic benefits.

So let’s not make the mistakes of the past. Progressive changes to VRT should be focused at replacing older cars with new ones. This is the only way to start the transition to a low and ultimately zero-emission free fleet. In that way we will all win, the consumer, the Industry, the Environment, protecting the 47,000 jobs and businesses in our communities.”