2022 Budget & Motoring

Written by
Michael Sheridan


7 mins read

The dreaded budget is coming.

It is safe to say Ireland’s motorists will suffer in the upcoming budget yet again! The car is seen by the powers that be as a discretionary spend and not the necessity most motorists in Ireland know it to be.

What To Expect.

In Minister Donohoe’s sights are business and private motorists. It is expected that incentives for electric cars for both fleet and private buyers will be reduced. This step is contrary to the Government’s commitment to reducing CO2 emissions. The effect will be a price rise for mid-size new electric vehicles and even small and compact family cars will see a rise also. Its’ own Climate Action plan set a wildly optimistic target of 1 million electric vehicles on Ireland roads by 2030.
Without massive incentives in place to encourage people to buy EVs and a revised 2040 target the figure is simply laughable.

The irony is of this move should not be lost as the State needs businesses and private buyers to adopt zero-emission electric cars as soon as possible. Conventional cars including hybrids and mild hybrids that produce over 100g/km of CO2 will see a VRT rise of somewhere between two to five percent. I have a wish list for the budget but sadly expect the opposite to happen.

Less Stick and more Carrot.

The argument for encouraging new vehicles is compelling: they’re greener, more economical and safer also. New cars are more expensive to manufacturer with ever-tightening EU regulations and increased standard safety features, this fact is ignored by government. Only a few years ago about €15,000 would buy a small hatchback – now you’ll need €20,000.

The argument for encouraging new vehicles is compelling: they’re greener, more economical and safer also.

The Minister needs to reduce taxation on average and low emission vehicles. The vast majority of motorists want a car that’s fit for purpose that won’t break the bank. Allow people access to mainstream motoring and seek out greater revenue from overtly luxurious vehicles. Yes, high end car pay vast amounts of tax already but a luxury car/SUV purchase is a without doubt a ‘discretionary spend’ and an act of conspicuous consumption. A caveat would be to leave used/second-hand gas guzzling cars alone. High fuel costs will ultimately lead to their demise.

Shift the tax burden from the vehicle to the Fuel.

If we want to reduce emissions, we should shift the focus directly to the fuel source. Annual motor tax and basic third-party insurance should be included in the price of fuel.

Instantly there would be no uninsured drivers plus we would lose the country layers of administration (and windscreen would be freed of needless paper disks). A few countries already attach certain elements of my suggestion e.g. Germany and New Zealand, but surely we could take the global lead on this. Imagine with just a few cents more added to a litre of fuel we would have no more uninsured drivers!

Tax-Free Safety Features.

New cars as a rule are safer for occupants and other road users, but the government taxes potentially lifesaving technologies and driving safety aids that can assist and often avoid collisions as they would a luxury item. Car buyers looking at a new car’s bottom line are encouraged not tick safety features due to their high cost. Europe is doing its best to regulate and mind us by dictating increased levels of ADAS/driving safety systems as standard in new cars, but they come at a literal price. ESP/ESC and collision mitigating braking have all contributed massively to improved road safety, saving countless people from serious injury or death. Yet an upgrade to a sound system attracts the same taxation as an autonomous lane keeping system… its incomprehensible! Sadly, the car makers are guilty to a degree by delivering similar systems often with different and hard-to-understand acronyms and abbreviations for safety features. An industry working group could however identify specific systems that make road users safer, and they could be pulled off the tax invoice. Recently all car importers have been forced to identify every new vehicle’s individual components for emissions taxation purposes – so the codes for safety features are already there on a data base.

Scrappage.

Older, more emissions-heavy cars should be given a dignified exit with an incentive scheme to take them off the road. By giving a cash discount off a new car when you agree to recycle the trade-in makes huge sense. Taxes will still come into the government coffers on the new sale, so the net cost of the scrapple is not that high. Again, we’d be making motorists and other road users safer with cleaner, more reliable and safer machines.

Electric Cars.

‘Government, please give us certainty for at least the next three years that you will encourage EV take up’. Fleet and private buyers need to plan their finances and be sure they won’t lose their shirts if they commit to EVs. The Department of Finance’s Tax Strategy Group, whose purpose is to find ways to raise taxes appears sadly clueless when it comes to motoring. The Government’s vehicle taxation set up has no impact or influence whatsoever on how the motor manufacturing industry works. Europe, and the emissions targets it sets the industry, is the only influence on the vehicles put on the menu in Ireland. The Government needs to be realistic and understand car makers cannot magic up cheap EVs – just yet. Up to now EVs have

The Government needs to be realistic and understand car makers cannot magic up cheap EVs – just yet.

got several subsidies to bring their prices down – so basically everyone has been paying to discount electric car buying. The current EV incentive/grant system is a mess of paperwork and needs to reform. At present we have EV tax and VRT reliefs here and grants there, not to mention the revised retail EV price ceilings to qualify, tax write downs and EV BIK to get our heads around. So, we seriously need a better system but now is not the time to cut EVs loose and let them sink or swim. Give it a few more years and EVs will naturally slot into the simpler CO2 emissions-based tax system. At the moment the simple fact is that EVs are more expensive to make and no tax advisory group can change that fact. Give it another 4 to 5 years and EVs will be the same cost to manufacture as traditional petrol/diesel cars but as of now they’re not – so I say leave EVs alone.

Michael Sheridan is a well-known and highly respected motoring journalist whose credits include The Irish Times, RTE (radio and television), Today FM and Motorhub to name a few. For over 20 years he has judged Irish Car of the Year and many other awards including Fleet and Van of the Year awards.

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