Motoring:Owners of larger cars are to be penalised under new VRT and motor tax rates introduced by Minister for Finance Brian Cowen in today's Budget.
He said the measures were "not about penalising people" but about helping the environment by targetting vehicles that give out high levels of carbon dioxide.
Annual car tax will be increased by 9.5 per cent for cars with engines that are 2.5 litres or less and by 11 per cent for vehicles with a bigger engines than this from February 1st next. Mr Cowen said Minister for the Environment John Gormley would bring forward proposals that will link motor tax to carbon dioxide emissions for new cars from July 1st, 2008.
The new VRT system will see a seven-band system based on carbon dioxide emissions and not on engine size. Rates will range between 14 per cent and 36 per cent and will be introduced on July 1st, 2008. Mopeds and electric cars will be exempt from VRT from January 1st next.
"Let me be clear," Mr Cowen said. "This measure is not about penalising people for their reasonable lifestyle choices - it is about providing them with opportunities and incentives.
"By explicitly linking VRT rates to carbon emissions on the basis of a new and highly transparent labelling system, we are providing individuals and families with the opportunity to make choices to help the environment and with financial incentives to do so."
Mr Cowen said existing incentives for certain hybrid, electric and flexible-fuel cars were being extended to July 1st, 2008.
Motoring lobby group AA Ireland welcomed the VRT change. "Its exactly what we had proposed," AA public affairs manager Conor Faughnan said.
However, he condemned the increase in annual car tax, saying it was "disappointing," especially since it affects ordinary family cars. "The 9.5 per cent increase for smaller cars does not seem justified on any ground except revenue generation."
Mr Faughnan said the investments in roads and public transport were "very much welcomed" as was the decision not to increase duty on petrol and diesel.
Mr Cowen said almost €1 billion would be invested in public transport and nearly €1.7 billion in the national roads network.
