A CHANGE TO the motor tax bands has not been ruled out by the Government, says the Minister for Communications, Energy and Natural Resources, Eamon Ryan, despite a shortfall in revenue as a result of both the scrappage scheme and a move towards cleaner cars with lower annual motor tax fees.
According to Mr Ryan, the long-term benefits of reducing our dependency on fossil fuels far outweigh any shortfall in motor tax revenue.
Speaking at the launch of a €5,000 grant to buyers of electric vehicles, Mr Ryan said that any shortfall in road tax revenue has the benefit of decreasing our dependency on imported fossil fuels. Figures from the Society of the Irish Motor Industry show that the scrappage scheme is likely to result in a €2.7 million shortfall in annual motor tax compared to the older, dirtier cars they are replacing. According to figures from motorcheck.ie, so far this year 74 per cent of all new car sales come from motor tax bands A and B: road tax revenue from these cars is just €4,481,568.
Mr Ryan told The Irish Times: "You have to look at this with various equations – we spend €6 billion per year on fossil fuels that are only going to get more expensive, so if we use our tax system to change behaviour (so that the Irish householder is saving money and we are keeping money in the country) then the benefit of that is huge.
“Yes there is a short-term hit in terms of tax revenue but the way we did it, we increased at the higher rate and decreased at the lower rate.”
Asked whether the government had any plans to alter the motor tax bands, the Minister didn’t rule this out.
“We keep looking at it, but it is doing what it is meant to do and that it is a real long term benefit. The CO2 average of an Irish car has dropped from 160g/km to 120g/km, which is a 20-30 per cent fuel-bill saving to the Irish economy.”
Currently, there is something of an anomaly in that annual motor tax is based on CO2 emissions, but motor tax band A is from 0-100g/km inclusive, so that means even though electric cars have zero emissions, they are still charged as band A cars, meaning electric car users are charged €104 a year in annual motor tax. This doesn’t sit well with Fine Gael transport spokesperson Fergus O’Dowd. “It doesn’t make any sense to have an emissions-based road tax system that charges tax for cars that don’t have any emissions.
“As part of the initial incentives to get Irish buyers into electric cars, for a certain period at least, there should be no road tax applied to cars that don’t produce tailpipe emissions.”
Nissan yesterday confirmed that unlike some models of electric car ownership, the Japanese brand will only separate battery ownership from the ownership of the car if it is a special requirement of a customer.
Other brands such as alliance partner Renault have discussed separating battery leasing, whereby customers will buy the car at a reduced price and lease the battery separately. It is expected that many of the details of these lease deals will be finalised as these cars arrive in larger numbers.
However Nissan said they will offer the Leaf as a stand-alone purchase. A spokesman said: “Our business model is designed to facilitate Irish customers. If an Irish customer wants to buy the electric vehicle including the battery they can do that. If the visual price of the car is not right, including the battery, then people won’t buy it. We don’t see the model of a battery being leased separate to the car as working in Ireland.”