Simi warns of ‘perfect storm’ on budget

The motor trade is warning of a potential “perfect storm” similar to that which decimated the sector in 2008 and has called on the Government to avoid introducing further instability in the budget.

In its pre-budget submission, the Society of the Irish Motor Industry (Simi) says the sector is facing a number of risks, including falling consumer confidence, overhanging debt issues for dealers since the recession, uncertainty over future diesel tax policy, Brexit and the introduction of a new international testing standards regime for cars.

The lobby group has called for stability when it comes to Vehicle Registration Tax, motor tax and fuel duties with no increases or structural changes to the regimes.

Alan Nolan, director general of Simi, told The Irish Times that with the new WLTP testing regime (which will introduce real-life driving data to the official fuel economy and emissions figures for cars) rolling out, there's a real likelihood that there will need to be a change or at least a review of the way Vehicle Registration Tax (VRT) and motor tax is structured here. "We are not going to see the impact of WLTP for probably a year so even if the Government is considering a structural change, it would seem to be a little too early to do that now and there is no indication that they are considering this at present," he said.

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While there has been ongoing speculation of an increase in the tax on diesel, such a move is being strongly resisted by representatives of rural motorists and long-distance commuters. They are arguing that neither the volume of affordable alternative fuel vehicles, nor the charging infrastructure, is in place to allow their constituents to change from diesel at present.

In terms of the promotion of alternative fuel vehicles, Simi proposes a host of measures to encourage buyers to consider changing, in particular to electric vehicles (EVs). These include no motor tax on EVs and reduced benefit-in-kind to encourage low mileage users currently opting for Tax Free mileage payments who are likely using their own older vehicles to move to EVs.

Other proposals include incentives for taxi firms to adopt electric vehicles, free tolls on State-owned facilities including the Port Tunnel and East Link bridge, and free parking in specific electric car bays in towns. At present in Dublin electric cars using public charging points still have to pay parking fees and there have been instances where cars have been clamped.

While Mr Nolan said he believes there is a willingness in Government to look at making the proposition of electric cars more attractive. “This is a challenge and it’s not an easy one. We all know we need to transit from our current mix to a better mix: electric cars but also keeping our minds open to other potential alternatives as well. But we have one million diesel cars and one million petrol cars on the road. If things are done that makes diesel cars burdened with greater tax or devalues them on the used market, that will actually make it more difficult for current owners to make the transition into an electric car or even a petrol hybrid.”