Budget 2021: Spare a thought for the smokers who drive diesel SUVs

Wine-loving electric vehicle motorists working from home should be left quietly pleased

Smokers who like driving diesel powered SUVs are likely to be hardest hit in abudget which has managed to be simultaneously parsimonious and giveaway.

Wine-loving drivers of electric vehicles who are working from home and fond of the odd dinner out or night away, meanwhile, will be quietly pleased by what the Budget contains – or doesn’t contain for them.

With almost all the measures in Budget 2021 aimed at stopping the country and the economy being derailed by the twin threats of Covid-19 and Brexit, there was no room for income tax cuts and many people – at least those who still have jobs – will find their take home pay in January much the same as it is now.

The old reliables have once more proven to be the old reliable with a packet of 20 cigarettes hit with a 50 cent increase while the duty on alcohol was left untouched.


The tax increase on cigarettes will see a 20-a-day smoker worse off to the tune of €182.50 a year while the price of a packet of 20 is now €14.

The Irish Heart Foundation welcomed the increase but warned more needed to be done to put tobacco and e-cigarettes out of the purchasing reach of young people.

"We are disappointed that there is no taxation on e-cigarette liquid," the IHF head of advocacy, Chris Macey.

"Tobacco use is still the leading cause of preventable death in Ireland with almost 6,000 smokers dying each year from tobacco related diseases. A healthier future is contingent on discouraging smoking and taking bold action."

VRT and Christmas bonus

In order to ensure the salary of full-time worker on minimum wage will remain outside the top rate of USC, the ceiling of the second USC rate band will be increased to €20,484 to €20,687, a move which will give a "modest benefit" to workers whose income is above that amount, the Minister for Finance Paschal Donohoe said.

There will be slightly more for the self-employed as a commitment to equalise the earned income credit with the PAYE credit was honoured by raising it by €150 to €1,650.

Motor tax and VRT, along with the cost of diesel and petrol, will all rise as part of a plan to encourage people to drive cars with lower or zero emissions.

The €7.50 increase in the carbon tax – an increase that is to be replicated annually for the next decade – will add around €1.30 to an average 60-litre tank of petrol and €1.50 to a tank of diesel.

Changes to Vehicle Registration Tax (VRT) will mean lower-emission cars will pay less tax while some cars which use high levels of petrol or diesel could climb in price with some family cars likely to cost around €1,000 more once the changes come into affect.

The Christmas bonus will be paid to welfare recipients, including around 90 per cent of the more than 220,000 people on the Pandemic Unemployment Payment.

Another pandemic related move which will see VAT rates of the tourism and hospitality sector drop from 13.5 per cent to 9 per cent will see the cost of meals and hotel stays fall for consumers once the cuts are passed down the line.

There was also some good news for many thousands of people working from home, who will now be able to claim a tax deduction for broadband in addition to heat and light.

Conor Pope

Conor Pope

Conor Pope is Consumer Affairs Correspondent, Pricewatch Editor and cohost of the In the News podcast