Motorists will have to pay between 4 per cent and 6 per cent more in annual road tax from April 1st, with the increases loaded on larger, less fuel-efficient cars, trucks and other vehicles.
The increases were announced to coincide with yesterday's Budget by the Minister for the Environment, Mr Dempsey, who said he would be bringing forward legislation to "green and re-balance the motor-tax regime". Goods vehicles, like cars with bigger engines, will be subject to the higher 6 per cent increase in motor tax, though the Minister said this would be offset for hauliers by abolishing the current annual £25 registration fee for articulated lorry trailers.
The lower increase of 4 per cent will apply to cars with smaller engines which generally use less fuel. The three tax bands that existed for motorcycles prior to 1992 will be reintroduced, again with lower increases for less powerful engines.
Motor taxation used to be dealt with in the context of the Budget until it was devolved to local authorities in 1998. With rapidly rising car ownership, it is now their most significant source of revenue, exceeding commercial rates in most cases.
Motorists and the Irish motor industry were happy with yesterday's Budget, writes Andrew Hamilton, Motoring Editor. As well as the reductions in petrol and diesel prices, the decreased VAT rate of 20 per cent means the price of a new £10,000 car goes down to £9,900.
Toyota Ireland was the happiest of all the motor distributors. Its innovative green and clean Prius hybrid car, operating on electric and petrol power, was launched on the market here last weekend at £23,975 ex works. Now because the Minister has cut its VRT liability by 50 per cent, the price falls by £2,500 to £21,475. The Prius, the only hybrid car on the Irish market, has zero emissions from its exhaust when operating in stop-start urban traffic.
Mr Dave Shannon, Toyota Ireland's managing director, said the Minister's decision on hybrid cars would give the Prius "a huge boost in public appeal". He had originally estimated 50 to 60 sales next year "but now we are thinking in hundreds".
Mr Conor Faughnan, for the Automobile Association, estimated the petrol reduction of three pence per litre would mean an average drop in fuel costs for petrol cars of £4.50 a month.
Mr Cyril McHugh, chief executive of the Society of the Irish Motor Industry, saw it as a positive Budget "not just because of the motoring aspects but through the reduction in personal taxation. We are also delighted that there is to be an increase in capital allowances and allowable expenses on business cars to £17,000."
