New car prices in Ireland will see a rise as the Tax Strategy Group of the Finance Department advised for a hike in Vehicle Registration Tax (VRT) in the upcoming budget in October. According to a report by The Irish Times, the average price of a new car will rise by €1,294 and that of electric cars by €4,100 once the recommendations are accepted.
The recommendation is to increase VRT between 2 to 5% for cars with emissions above 100g/km. Also the team recommends for a drop in the cap for tax relief on electric cars to €40,000, with the current €5,000 tapering off from €30,000. This will make it difficult for many potential buyers to purchase some popular electric cars like Volkswagen ID.3 Family in Ireland.
The tax increases are based on emissions and it will see a rise of €604 for cars with emissions between 101g/km and 105g/km, €1,141 for cars with emission of 126g/km to 130g/km, rising to €2,401 for new cars with emissions of 141g/km. The average price hikes increase significantly from there. Vehicles with emissions above 191g/km, which include several large SUVs, could have average prices rise by an estimated €8,765.
Meanwhile the proposals are being widely criticised by the motor industry people and point out the move will severely affect the government’s own Climate Action Plan.
If the new car prices are increased, people will be hesitant to buy them and will keep using their old cars. It is a known fact that the older cars emit more carbon than the new ones. Also the move to decrease tax relief for electric cars, will see the same result. The government wants 936,000 electric vehicles in Ireland by 2030 and it is not likely to be achieved with the proposed tax changes, experts warn.