The Minister for the Environment has announced a new system of calculating car tax that he said will give motorists the incentive to buy more environmentally friendly cars from July 1st next year.
John Gormley has delivered a "carbon budget" in the Dáil that identifies how the State can reduce harmful carbon dioxide emissions to counteract climate change, to protect the economy and to meet its international obligations.
Minister for the Environment John Gormley
He said climate change "is the greatest challenge facing humanity over the coming century".
The Minister announced that with effect from July 1st next year, there will be a "fundamental change" in the manner in which motor tax is charged for all new cars and imported cars.
Tax will in future be charged solely on the emissions and the system will be rebalanced in favour of cars with lower emissions, he said. This system only applies to cars bought from next July.
Other cars will be taxed based on the current system of engine size, to which changes were also announced in yesterday's Budget.
Seven CO2 "bands" from A-G will determine the rate of tax payable on a vehicle.
Mr Gormley said there will be a "commonality of approach" between the motor tax and VRT systems. There will be a mandatory labelling system for cars based on their emissions levels.
This will be accompanied by a public information campaign which will promote the purchase of fuel efficient cars, the Minister said.
"I see the proposed improvements in vehicle labelling as a positive step in enabling Irish motorists to make more informed choices in buying new vehicles, and I look forward to support from the motor industry in making its introduction a success."
Motor tax rates will be graduated as one moves up the CO2 bands.
- Band A (under 120 grams per km) - €100.
- Band B (121-140 grams perkm) - €150.
- Band C (141-155 grams per km) - € 290.
- Band D (156-170 grams per km) - €430.
- Band E (171-190 grams per km) -€ 600.
- Band F (191-225 grams per km) - €1,000.
- Band G, the top band -€2,000, reflecting CO2 emissions of over 225grams per km.
"The clear objective of this new motor tax system is to influence the purchasing decisions of consumers by rewarding the buyers of low-emitting cars and charging a premium on less efficient vehicles," Mr Gormley said.
The Minister also announced he will develop a national energy efficiency standard for lightbulbs, which will see an end to the use of incandescent bulbs by January 2009.
Mr Gormley said the changes would result in emissions savings of up to 700,000 tonnes of carbon dioxide per year from residential lighting alone.
He estimated it would also save consumers about €185 million per year in electricity costs.
The Minister welcomed yesterday's Budget, which he said had demonstrated a "clear pathway" for the sound management of the economy.
"The Carbon budget marks the beginning of a new era. It is an era in which climate change moves to the heart of Government decision-making. It puts our responsibilities to tackle climate change on an equal footing with our responsibilities to manage the economy," he said.
"It recognises that the economy and the environment cannot be separated; and that the greatest risk to the economy is climate change."
Reforms contained in yesterday's Budget included vehicle registration tax, which will be in seven bands - ranging from 14 per cent to 36 per cent of the vehicle's value.
Motor tax is increased, for the first time since 2003, by 11 per cent for cars over 2.5l and 9 per cent for under 2.5l.
The Government proposes to produce a carbon budget each year to outline how it will achieve its aim of reducing greenhouse gases by 3 per cent for the following 12 months.