Motor tax for commercial vehicles to be significantly cut

Motor tax on commercial vehicles is to be overhauled, with tax the largest vehicles dropping by nearly €4,300 a year.

In his budget speech Minister for Finance Michael Noonan said he was replacing the current 20 existing motor tax rates for commercial vehicles with just five. These will range from €92 to €900, compared to the current system that starts at €333 and rises to €5,175.

The new regime will feature an annual motor tax charge of €92 for electrical goods vehicles, €333 for vehicles up to 3,000kgs, €420 for vehicles up to 4,000kgs, €500 for vehicle between 4,000kgs and 12,000kgs and €900 for vehicles over 12,000kgs.

This will come into effect from January 1st. Mr Noonan said it will benefit 28,500 commercial vehicles. It will cost the exchequer €43 million per year.

“This is an interim measure pending the replacement of the current commercial motor tax regime with a fairer basis for calculating commercial motor tax, which will be based on the Gross Design Vehicle Weight of the goods vehicles,” he said.

"Road tax for large goods vehicles in Ireland is too high by comparison with the regime applying in Northern Ireland and the rest of the UK. This is causing distortions in the haulage industry and increasing costs across the economy."

No change for car owners

The budget brought no changes for car owners, with fuel and motor tax on private cars remaining unchanged.

"A litre of petrol actually costs 44 cents," says AA Ireland director of consumer affairs, Conor Faughnan. "Everything else - over 92 cent in the litre - is tax. The AA believes this is an excessive degree of taxation that affects all parts of the economy, not just motorists."

The motoring organisation was also critical of the Minister for failing to address rising insurance costs. “The AA points to the huge increase of 26 per cent year to date in the cost of motor insurance and is disappointed that the government had nothing to say on this critical issue in the budget. All motor insurance currently includes a 5 per cent levy which adds to the cost,” said Mr Faughnan.

"That levy originally dates back to the failure of PMPA more than 30 years ago," he said. "The subsequent failure of Quinn Insurance in 2010 saw that levy increase. Irish motorists are the ones actually picking up the bill for market and regulatory failure."