Motor taxation increases criticised

Motorists are being unfairly burdened with tax increases in the forthcoming Budget, according to lobby groups and consumer organisations.

Minister for the Environment Phil Hogan yesterday confirmed plans to increase motor tax but denied reports the charge for low emission cars could rise by as much as 63 per cent.

Motorists are also expected to face additional charges due to the proposed 2 per cent rise in VAT and an anticipated increase in carbon tax.

Speaking on RTÉ's The Week in Politics last night, Mr Hogan confirmed reports that there would be adjustments of motor tax bands and rates.

The Automobile Association said today the Government was likely to be accused of acting unfairly in choosing to increase taxes for recently-bought fuel-efficient vehicles in the Band A and Band B categories.

"This will feel like an act of bad faith to individuals who purchased new cars," said AA director of policy, Conor Faughnan.

"Over the past three years, 70 per cent of new car sales have been in the Band A and Band B categories and these were sold to people who made the conscious choice to buy a greener, cleaner car with the promise that this would have a lower tax bill.

"It will feel like the Government is reneging on that promise and people will not only be out of pocket but also disillusioned and this will make it that much more difficult for the Government to credibly make promises in the future," he added.

Mr Faughnan said the decision by the previous coalition to switch to an emissions-based tax system had been a bad move because as car technology developed more types of vehicles ended up fitting into the Band A and B categories.

"Essentially the tax system has ended up being overtaken by the development in car technology with most new vehicles now being non-polluting," he said.

In addition to increases motor tax rates, the AA said the 2 per cent rise in VAT would add 2.5 cent to the cost of a litre of petrol, while an anticipated rise in carbon tax of at least €5 per tonne will add another 1.5 cent.

Mr Faughnan said owning a car was an essential rather than a luxury and that opting to raise tax on essentials had been found to be counter-productive.

"Overall fuel usage is down this year and that is likely to increase," he said. "The cost of fuel has been pushed up so much that it's now actually costing the Exchequer and also continuing to erode the difference between the cost of fuel in the North and thereby disincentivises motorists to cross the border to buy petrol in the Republic."

The Consumers' Association said motorists who had gone out of their way to purchase greener cars were receiving a "slap in the face" by the Government. It added that with additional taxes also expected, motorists were being penalised simply for owning cars.

"Drivers are being overburdened with taxes simply because they can't give away their cars," said chief executive Dermott Jewell.

He added that there was a danger that consumers - who were already struggling to pay gas and electricity bills - could end up not renewing motor tax and insurance. "You can push people too far and I think that this is going to do it," he said.

Friends of the Earth said it was unfair to punish those who had purchased greener cars with its spokesman Oisín Coghlan describing it as "a stab in the back" for motorists.

The Green Party, which supported the switch to a low-emissions based motor tax system, was also critical of the Government's decision to raise taxes on low-emissions vehicles, with its chairman Dan Boyle describing the move as "pure genius".