Budget 2017: VRT relief extended for electric cars and hybrids

Tax relief for hybrid and electric cars has been extended in Budget 2017. Due to end on December 31st this year, the vehicle registration tax (VRT) reliefs will be extended for five more years for electric cars and two more years for hybrids.

Currently electric vehicles are entitled to claim VRT relief of up to €5,000. Hybrids can claim relief of €1,500, while plug-in hybrid vehicles can claim €2,500.

Despite ambitious targets for alternative-powered vehicles, sales of full electric cars have been lacklustre. So far this year, just 371 new electric cars have been registered in a market of 143,195 new cars. Petrol-electric plug-in hybrid sales this year totalled 267, while diesel plug-in hybrid sales came to 11, according to the Society of the Irish Motor Industry (Simi).

There was no increase in diesel tax in the budget, despite significant lobbying from environmental and heritage groups. On Monday An Taisce became the latest to push for a rise, saying there was growing evidence that tiny particles from diesel fumes lodge in the brain where they may contribute to Alzheimer’s disease.

It followed similar calls from European Greens and others to reverse the proliferation of diesel cars which stems from the introduction of “cleaner” diesel engines from about 2007 onwards.

Popular choice

In 2015, diesel engines were the most popular in western

Europe

, with more than half of buyers choosing them.

In Ireland, diesel vehicles have accounted for 70 per cent of all new sales so far this year, according to Simi.

The move to diesel was due to changes in the Irish motor tax regime in 2008. Introduced by the Fianna Fáil/Green Party coalition, they replaced a tax system based on engine size to one based on carbon dioxide (CO2) emissions. As diesel engines generally have lower CO2 emissions than petrol ones, buying patterns shifted dramatically in line with the tax changes. In 2007, some 70 per cent of new cars had petrol engines. Last year, 71 per cent of new cars had diesel engines.

In its pre-budget statement this week, An Taisce said a new study at Lancaster University and published in the Proceedings of the National Academy of Sciences found high levels of magnetite (an iron oxide) in brain tissue of 37 people it studied. Alzheimer's patients have high levels of magnetite in brain tissue.