Energy agency says car tax plans too weak

Government proposals for reforming VRT car taxes have been criticised by Sustainable Energy Ireland (SEI), the State energy agency…

Government proposals for reforming VRT car taxes have been criticised by Sustainable Energy Ireland (SEI), the State energy agency, as being insufficient to encourage people to switch to more environmentally friendly vehicles.

In a submission to the Department of Finance, SEI warned that the reform options outlined last December by the Government were unlikely to be effective in their aim of reducing greenhouse gas emissions from transport by getting people to buy more fuel-efficient vehicles.

SEI has said that four options being put forward to reform VRT had "inherent weaknesses" that will diminish their effectiveness.

The agency also warned that some of the options put forward by the Government for consideration would actually penalise people who wanted to buy more environmentally friendly vehicles.

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The options were contained in a consultation paper published by the Department of Finance at last December's Budget.

Its VRT reforms have been put forward by Government as a key element in its plan to reduce CO2 and other greenhouse gases from their current record levels.

The proposals will form a prominent element in the Government's revised climate change strategy, to be published next Monday.

Increases in transport emissions have been the single greatest contributor to increases in greenhouse gas emissions.

Emissions from transport have grown by more than 150 per cent since 1990, which is similar to the economic growth rate of the country for the same period.

At present VRT taxes, among the highest in Europe, are based on engine size.

The Department of Finance in its paper has said that switching to a VRT system based solely on CO2 emissions "should not be adopted" because revenue would be put at risk, and environmental protection was not the primary aim of the tax.

The department put forward four options based on a combination of engine size and emission levels for cars.

However, the SEI said one of the options put forward "contains perverse anomalies" where the VRT rate is lower for some larger-engine cars with similar CO2 emissions to smaller vehicles.

In its submission to the Government's consultation process, it said a further two options weakened the incentive to buy more environmentally friendly vehicles "by penalising those looking to acquire a larger but more efficient engine".

The final option had no element relating to CO2 emissions, the SEI stated. It believed the "best course of action is to base the system solely on CO2 emissions" to uphold the "polluter pays" principle.