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Tax Strategy Group | TSG XX/XX Title
CLIMATE CHANGE PAPER
ENERGY AND ENVIRONMENTAL TAXES
AND VEHICLE REGISTRATION TAX
Tax Strategy Group – TSG 16/03
19 July 2016
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Tax Strategy Group | TSG 16/03 Climate Change Paper – Energy and Environmental Taxes and Vehicle
Registration Tax
TSG16/03
Tax Strategy Group- Climate Change Paper
Energy and Environmental Taxes and
Vehicles Registration Tax
Contents
Introduction................................................................................................................................. 3
Emissions Profile ......................................................................................................................... 4
Overview ..................................................................................................................................... 5
Transport Fuels............................................................................................................................ 6
Carbon Tax................................................................................................................................... 9
Cross Border Trade .................................................................................................................... 13
Electric Vehicles......................................................................................................................... 13
Heavy Goods Vehicles ............................................................................................................... 15
Vehicle Registration Tax ............................................................................................................ 16
Options ...................................................................................................................................... 23
Appendix I – Carbon Tax Options .............................................................................................. 26
Appendix II – EU Excise Tax Rates ............................................................................................. 27
Appendix III................................................................................................................................ 28
Appendix IV ............................................................................................................................... 29
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Tax Strategy Group | TSG 16/03 Climate Change Paper – Energy and Environmental Taxes and Vehicle
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Introduction
1. This paper examines how the tax system can be used to help meet climate change goals of
reducing emissions, increasing energy efficiency and developing less environmentally harmful
policies. It puts forward options in respect of energy and environmental taxes including
vehicle registration tax for Budget 2017.
2. The Programme for Partnership Government identifies climate change as being the global
challenge of our generation which requires radical and ambitious thinking to respond to a
changing environment. In December 2015 Ireland, along with over 190 other nations,
adopted and subsequently signed the Paris Agreement which aims to keep the increase in
global temperatures well below 2 degrees Celsius.
3. Ireland already has ambitious binding targets as part of the EU 2020 Climate and Energy
package. The EUs Effort Sharing Decision sets targets which apply to emissions not included
in the EU Emissions Trading System (ETS). For Ireland these comprise of: a 20% reduction in
greenhouse gas emissions; a 16% target of energy to come from renewable sources; a 20%
improvement in energy efficiency. New targets for the period from 2021 to 2030 are due to
be announced later this year.
4. The Climate Action and Low Carbon Development Act 2015 sets out a plan for decarbonising
the economy. A key step on this path is the National Mitigation Plan which will establish
Irelands low carbon strategy out to 2050.
5. Taxation is seen as a key tool towards achieving these objectives, especially in the area of
emissions. Currently Ireland’s emissions are projected to significantly exceed the 2020
targets which may result in costs for purchasing compliance.
6. Recent taxation developments such as the introduction of a carbon tax and linking vehicle
registration tax and motor tax to emissions have resulted in reduced levels of emissions.
However it is expected that economic recovery, coupled with current low oil prices, will lead
to an increase in emissions making meeting our targets even more difficult.
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Emissions Profile
7. Ireland’s EU greenhouse gas emission targets and reduction obligations are split into two
broad categories. The first category is a cap and trade system which covers the large energy
and power industry which have their emissions controlled via the as the Emissions Trading
System (ETS). The instillations within the ETS are responsible for their emissions and can be
fined for failing to cover the emissions with allowances. The second category, known as the
non-ETS, includes emissions from agriculture, transport, residential, commercial, waste and
non-energy industry. Non-ETS emissions are the responsibility of each Member State and
therefore subject to Government policy in order to meet binding targets.
8. For 2014, the Environment Protection Agency estimated the total national greenhouse gas
emissions in Ireland to be 58.21 million tonnes carbon dioxide equivalent (Mt CO2eq). This is
0.7% lower (0.42 Mt CO2eq) than emissions in 2013. Emissions in the ETS category increased
by 1.7% or 0.27 Mt CO2eq whereas non-ETS emissions decreased by 1.6% or 0.69 Mt CO2eq.
The below figures shows Irelands overall greenhouse gas emissions for 2014 broken down by
sector and projected non-ETS emissions for 2016.
Figure 1 - Overall Greenhouse
Gas Emissions in 2014
Waste
3%
Transport
19%
Energy
19%
Residentia
l
10%
Figure 2 - Projected Non-ETS
Emissions 2016 by Sector
Industry &
Commercial
7%
Residential
12%
Waste
2%
Other
Combustion
2%
Energy
1%
Agriculture
47%
Agricultur
e
33%
Industry
and
Commerci
al
16%
Transport
29%
Source: EPA
9. Ireland is projected to miss the 2020 emission target of a 20% reduction in emissions in the
non-ETS sectors. Non-ETS greenhouse gas emissions are projected using two scenarios: with
measures which assumes no additional policies beyond those in place at the end of 2014; and
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with additional measures which assumes full achievement of all existing measures and
planned measures and policies. Current projections indicate that with measures will meet a
6% reduction on 2005 levels while with additional measures will achieve an 11% reduction,
both of which are well short of the 20% target. Given the possible financial sanctions for
failing to meet these binding targets it is essential that all means, including the tax system,
are considered to achieve these climate goals. The greater the gap to achieving these 2020
targets the more difficult the task of achieving our 2030 targets becomes.
Overview
10. The release of greenhouse gases into the atmosphere from the burning of fossil fuel has
contributed to global warming. Environmental taxes are seen as a way to limiting emissions
as well as generating Exchequer revenues. In 2015 environmental taxes amounted to
€3.19bn. In 2014, environmental taxes were equivalent to 2.43% of GDP. This is broadly in
line with the EU average of 2.46% and the Euro area (19 Member States) of 2.42%.
Receipts €m
Light
2011
2012
2013
2014
2015
2016*
Oils €993m
€904m
€850m
€800m
€768m
€779m
Oils €1130m
€1116m
€1177m
€1219m
€1351m
€1457m
(Petrol)
Heavy
(Diesel,
etc.)
MGO
LPG
€0.03m
€0.06m
€0.14m
€0.23m
€0.3m
€0.3m
Carbon Tax
€298m
€354m
€388m
€385m
€419m
€435m
Electricity Tax
€7m
€6.3m
€5.7m
€4.5m
€4.6m
€4.8m
VRT
€388m
€379
€437m
€542m
€650m
€745m
*2016 Estimated
11. The above table indicates the breakdown of receipts from environmental taxation. Motor
tax is not considered as it forms part of the Local Government Fund. It is evident that as the
overall economy grows the consumption of fossil fuels grows. This is perhaps most notable
with the gradual increase in carbon receipts following the final phase of its implementation
in 2014.
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12. Receipts from Vehicle Registration Tax (VRT), which is heavily influenced by economic activity,
increased significantly in 2015 and are expected to increase again in 2016. This is evidence
of returning consumer confidence coupled with pent up demand for new vehicles following
the economic recession. VRT is covered in depth later in this paper.
13. A concerning trend is the increase in diesel consumption and corresponding decrease in
petrol consumption by private motorists who have switched from petrol engine vehicles to
diesel ones following the introduction of emissions based VRT and motor tax in 2008 and
subsequent revision in 2013. This issue is examined in detail in the section on transport fuels.
14. The sales of agricultural diesel (Marked Gas Oil) following a decline remain stable. This is
believed to be due in part to Revenue’s successes in tackling the laundering of agricultural
diesel. In early 2016, Revenue carried out a random sampling programme which tested for
the presence of the new marker in road diesel in the storage tanks of around 200, or almost
10%, forecourt retailers. No samples tested positive for the Accutrace S10™ fuel marker. The
sampling, which was carried out under the independent supervision of Revenue's Statistics
and Economics Research Branch, demonstrates that the selling of laundered fuel in the
market is negligible and close to being fully eliminated.
Tackling the laundering of
agricultural diesel is, and will remain, a priority for Revenue. Any increase in the excise rate
applied to diesel will increase the differential with agricultural diesel and increase the
incentive for fuel fraud.
Transport Fuels
15. Following annual increases in excise on both petrol and diesel from 2009 to 2012 the excise
rates have remained constant since then. The rate of excise on petrol is 58.7c, including 4.6c
carbon charge, per litre while the excise on a litre of diesel is €47.9c, including 5.3c carbon
charge.
Increase in Excise (VAT inclusive) from 2009 - 2012
Budget
2009
Petrol
Diesel
2010
2011
2012
8c (Oct 08) 4.2c*
4c
1.4c*
5c (Apr 09) 4.8c*
2c
1.6c*
*increase applied via carbon tax.
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16. Of the 28 Member States in the EU, the excise rate on a litre of petrol in Ireland is the 12 th
highest while diesel is the 7th highest. The applicable excise rates for all Member States are
contained in Appendix II.
Figure 3 - Petrol and Diesel
Consumption '000 Litres
Figure 4 - Petrol and Diesel
Excise Receipts €m
3,500,000
1,400,000,000
3,000,000
1,200,000,000
2,500,000
1,000,000,000
2,000,000
800,000,000
1,500,000
600,000,000
1,000,000
400,000,000
500,000
200,000,000
Petrol
Diesel
Petrol
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2015
2014
2013
2012
2011
2010
2009
2008
2007
-
2006
-
Diesel
Source: Revenue Commissioners
17. As the above figures show, the consumption and excise receipts from petrol are declining
year on year while diesel consumption and receipts are increasing.
18. Figure 5 shows that in 2008 private
vehicles travelled 31,346 million
kilometres with petrol vehicles
accounting for 73.4%. By 2014,
private vehicles travelled a similar
distance
of
31,189
million
kilometres with diesel accounting
for more than half of that distance,
50.9%.
Figure 5 - Private Vehicles Kilometers
Travelled (millions)
25000
20000
15000
10000
5000
0
2008
2009
2010
Petrol
2011
2012
2013
2014
Diesel
Source: CSO
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19. As of the end of 2015 Ireland has 2.5 million vehicles on the road, over 77.1% of which
are private cars. Goods vehicles account for 12.9%, tractors 3.6%, motor cycles 1.4%
and all other vehicles accounting for the remaining 4.9%. Of the 1.9 million private
cars 55.4% are petrol and 43.6% are diesel. The trend of petrol over diesel is being
reversed due to the high proportion of new diesel car sales, 71.1% in 2015 against
27.2% petrol car sales. Hybrid and electric vehicles accounted for 1.16% of sales in
2015.
The Future of Excise on Transport Fuels
20. Policy changes to VRT and motor tax in 2008 and 2013 as well as widening of the excise
gap between petrol and diesel have had the unintended consequence of increasing the
up-take of diesel cars by motorists. In 2015, diesel cars outsold petrol at a rate of more
than 2.5 to one. The reduced rate of excise duty on diesel is due to diesel being viewed
as the traditional fuel of business. Larger transport vehicles such as heavy goods
vehicles, up until recently, had no viable alternative and therefore enjoyed a reduced
rate. During the economic recession the gap between the excise on petrol and diesel
increased further offering greater incentives for private motorists to switch to diesel.
21. The resulting increase in the number of diesel vehicles, particularly in cities, is giving
rise to health concerns due to health implications of higher NOX (nitric oxide and
nitrogen dioxide), sulphur oxide and particle matter emissions associated with these
vehicles. The World Health Organisation estimate that air pollution causes 7 million
premature deaths annually as well as impacting negatively on the lives of many more.
A number of cities are moving to ban diesel engine vehicles from within their
boundaries, London, Paris and a number of German cities among them. The
Netherlands has proposed a ban on the sale of cars with combustion engines beginning
in 2025.
22. The Minister for Transport has requested the equalisation of excise duty on petrol and
diesel for climate policy reasons. The OECD have recommended at least an
equalisation of excise rates on petrol and diesel to address negative externalities
caused by the combustion of these fossil fuels. The basis of this suggestion is the lower
tax rate on diesel fails to account for the social and health environmental externalities
caused by its combustion. A litre of diesel produces approximately 15.5% more
greenhouse gases than a litre of petrol.1 An argument often put forward to justify the
1
The Diesel Differential – OCED Taxation Working Papers No.21
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differential is the relative fuel efficiency of diesel over petrol, however, any fuel
efficiency is an advantage to the driver and does not account for the externalities. If
the excise on both fuels was equalised a diesel vehicle would still pay less tax than the
petrol on the basis of greater fuel efficiency. Due to this fuel efficiency a car will travel
further on litre of diesel when compared to petrol but will produce more harmful
emissions.
23. Our closest trading partner, the UK, already has equalised excise rates on petrol and
diesel. A number of countries, notably France and Belgium, have also moved to
equalise the excise rate on petrol and diesel. The excise on Diesel in Ireland is currently
22% less than on petrol.
24. How this equalisation could be achieved is included in the options part of this paper.
25. Discussions are ongoing with the Department of Transport and the Sustainable Energy
Authority of Ireland to examine the possibility of including some of the technology
necessary to adopt natural gas as a transport fuel in the Accelerated Capital Allowance
Scheme. This would further incentivise the adoption of this cleaner fuel.
26. The Alternative Fuels Directive (Directive 2014/94/EU) is being transposed by the
Department of Transport, Tourism and Sport into Irish legislation prior to the 18
November 2016 deadline. This will set out the obligations on Ireland to enable a
transition to alternative fuels in transport such as electricity, compressed natural gas,
liquefied natural gas and ultimately hydrogen. The Directive requires Member States
to adopt and publish a National Policy Framework that will support the provision of
recharging and refuelling infrastructure, common technical standards and appropriate
consumer/user information. The Framework will include targets for establishing
adequate coverage of alternative fuels infrastructure across the EU, which is expected
to give increased reassurance to car manufacturers and consumers over the long term.
Measures to support the use of the infrastructure will also be included in the
Framework.
Carbon Tax
27. Carbon tax was introduced on a phased basis beginning in 2009. Initially it applied to
motor fuels, was extended to other non-solid fuels in 2010 and finally extended to solid
fuel in 2013 and 2014. Since its introduction carbon tax receipts have grown steadily
mirroring the overall economic recovery and this trend has continued since the final
phase of its roll out in 2014.
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History of Irelands Carbon Tax Yield
Year
Rate Per Tonne
Yield
2010
€15
€223m
2011
€15
€298m
2012
€20
€354m
2013
€20
€388m
2014
€20
€385m
2015
€20
€419m
2016
€20
€435m*
* estimated
28. The breakdown of carbon tax receipts show that as petrol consumption declines, diesel
2010 €98m
€65m €0.04m €17m €27m €1.6m €2.6m €0.01m €11m
Total Net Receipts
Solid Fuel
Natural Gas
Auto LPG
LPG (Other)
Fuel Oil
Marked Gas Oil
Kerosene
Aviation Gasoline
Petrol
Auto Diesel
Year
increases. Following a 10% decrease from 2013 to 2014, excise receipts from marked
gas oil remains stable indicating the success of Revenue’s work to tackle the illicit use
of this product. Natural gas, Kerosene and solid fuel receipts all increased in 2015 when
compared with 2014.
€223m
-
2011 €98m
€60m €0.04m €41m €49m €2.3m €5.6m €0.01m €43m
€298m
-
2012 €131m €75m €0.05m €40m €55m €2.3m €6.5m €0.03m €45m
€354m
2013 €137m €70m €0.03m €47m €60m €2.3m €7.6m €0.07m €57m €7.3m €388m
2014 €145m €66m €0.02m €42m €54m €1.8m €7.6m €0.11m €52m €17.2m €385m
2015 €158m €62m €0.05m €53m €55m €2.0m €8.4m €0.14m €57m €23.5m €419m
29. There have been reports of sourcing of solid fuel from Northern Ireland resulting in a
loss of carbon tax receipts. This is examined in the Cross-Border Trade section. While
it is not possible to accurately estimate the impact of any potential cross-border trade
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the SEAI estimate2 that greenhouse gas emissions from the residential sector were
10.4% lower in 2014 compared with 2013 levels. These reductions are mainly from
decreased solid fuel consumption – coal, smokeless coal and lignite decreased by
23.2%, 11.2% and 26.8%, respectively and by 19.8% overall. However, the weather in
2014 was considerably milder than 2013. Renewable energy increased by 13.3% in
2014 and provided for 7.7% of total fuel consumption.
HE CHP (Highly Efficient Combined Heat and Power Plants)
30. The Minister for of Communications, Energy and Natural Resources has sought an
examination of the tax treatment of fuel use in highly efficient combined heat and
power plants (HE CHP). CHP is the simultaneous generation of usable heat and
electricity in a single process. The dual process of using energy inputs to generate both
heat and power is the most efficient use of fuel with an energy efficiency of up to 80%
which is significantly higher than individual processes. The practice in many other
Member States, including Germany, France and Belgium is to entirely exempt the
inputs to these from the carbon tax. In the UK fuel inputs are exempt from the Climate
Change Levy.
31. Currently a relief is provided at the minimum rate allowable under the Energy Tax
Directive of €0.54 per megawatt hour of natural gas which is the fuel used in the vast
majority of these plants. However, the White Paper ‘Ireland’s Transition to a Low
carbon Energy Future 2015 -2030’ states CHP should be encouraged to improve energy
efficiency and in this context consideration should be given to a full exemption from
the carbon tax for fuel used in these plants. This would also assist in the adoption of
biomass as a power source in CHP plants. Based on the information available to date
to fully exempt the fuel inputs used in HE CHP plants would cost in the region of €1m
per annum.
Carbon Tax Relief for Biomass Element of Coal
32. Following an approach from Department of Environment, Community and Local
Government a relief for the biomass element of solid fuel was legislated for in Finance
Act 2013. This provision was subject to a commencement order to allow for
Regulations to be made providing for the verification of the biomass content of such
2
SEAI, Energy in Ireland 1990-2014
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fuel. These regulations were signed into law on 8 March 20163. A number of concerns
must be addressed prior to the commencement of this measure, including the
availability of the relief only for low smoke and not smokey solid fuel and possible State
aid implications. A channel of communication has been established with DG
Competition in the European Commission with the aim of ensuring this measure will
be free from State aid once commenced.
Electricity tax
33. Electricity tax has applied in Ireland since October 2008 and applies at the minimum
allowable, under the EU Energy Tax Directive, of €0.50 per MegaWatt Hour (MWh) for
business and €1.00 per MWh for non-business. This is significantly lower than the EU
average of €4.76 per MWh for Business use and €11.3 per MWh for non-Business use.
A small number of electricity consumers, such as Government agencies and local
authorities, fall into the non-business category and this has led to administrative
difficulties for Revenue. Domestic users of electricity are exempt from the electricity
tax.
34. The
European Commission, through the Environmental Fiscal Reform
recommendations, have recommended the equalisation of electricity tax for business
and non-business consumers in Ireland. This would eliminate the administrative
difficulties and ensure a clear application of electricity tax. As the below table show
receipts from the electricity tax are relatively stable at around €4.5m per annum.
Year of liability Tax
2008
€1.94m
2009
€7.08m
2010
€6.86m
2011
€7.05m
2012
€6.32m
2013
€5.53m
2014
€4.48m
2015
€4.62m
2016
€4.8m est.
3
S.I. 128 of 2016 AIR POLLUTION ACT (MARKETING, SALE, DISTRIBUTION AND BURNING OF SPECIFIED
FUELS) (AMENDMENT) REGULATIONS 2016
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Cross Border Trade
Cross Border Comparisons (Prices & rates in € as of 12 May 2016)
Product
ROI
N.I.
Price
Price
Price
Differential
Total
Tax/Duty
this State
Petrol (litre) €1.30
€1.38
€-0.08
€0.83
€0.97
€-0.14
Auto-diesel
€1.35
€-0.22
€0.69
€0.96
€-0.27
€1.14
Total
in Tax/Duty
N. Irl
Difference
Total
Tax/Duty
(litre)
35. Cross border trade is inevitable along any border with price differentials attracting
consumers from one side to purchase goods in another jurisdiction. The auto-fuel price
differential is based on three discreet variables - excise, VAT and the currency exchange
rates. A survey taken on 12 May 2016 indicates that petrol and particularly diesel are
cheaper in the South than in Northern Ireland. This price differential has led to a
significant level of ‘fuel tourism’ where fuel is purchased in the South and consumed
in Northern Ireland. These sales of fuel consumed elsewhere are recorded as Ireland’s
greenhouse gas emissions under Kyoto protocol and European Commission accounting
rules.
36. Solid fuel is cheaper in Northern Ireland due to the reduced VAT rate of 5% in the North
compared to 13.5% in the South and the application of the solid fuel carbon tax in the
South. This has given rise to reports of consumers sourcing solid fuel in the north
whose sulphur content is not compatible with regulations set out in the SWiFT 7
verification mechanism. Any increase in the rate of carbon tax in the South would
increase the price differential and further exacerbate these issues.
37. The decision of the United Kingdom (UK) to leave the EU has given rise to uncertainty
in the markets and has resulted in a drop in Sterling against the Euro. While the UK
remains a full member until such time as it formally leaves, developments will need to
be monitored closely as this could give rise to an increase in cross border trade.
Electric Vehicles
38. Transport emissions account for 20% of all emissions and 29% of non-ETS emissions in
the State. Our vehicle fleet has an overwhelming dependence on oil. As the economy
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recovers emissions from this sector will continue to grow, emphasising the need to
diversify our sources of fuel to cleaner alternatives.
39. The Programme for Partnership Government outlines this Government’s intention to
become a leader in the take-up of electric vehicles.
‘We want Ireland to become a leader in the take-up of electric vehicles. We will
establish a dedicated taskforce involving relevant government departments,
agencies, industry and representative groups, to work on this goal and to set
ambitious and achievable targets. The taskforce will also investigate the potential
role and use of other future fuels such as hydrogen.’
40. Ireland’s target under the Renewable Energy Supply Directive (Directive 2009/28/EC)
is to ensure that 10% of its transport energy comes from renewable sources by 2020.
Currently, progress towards this target is largely reliant on liquid biofuels such as
biodiesel. As the number of Electric Vehicles (EV) grows this will allow wind power to
contribute towards this target. The SEAI have stated that to meet our 2020 renewable
targets 1 in 5 vehicles sold in 2020 must be an EV. The biggest obstacle preventing the
large scale adoption of electric vehicles in Ireland is range anxiety, which is the fear of
running out of power far from the nearest charging point or destination.
Manufacturers are keen to address these fears through increasing battery life,
however, for long distance driving the technology will need to be proven before large
scale adoption.
41.
In October 2008, the Government outlined a target that 10% of all passenger vehicles
would be electric by 2020. To date, despite the relative generosity of the VRT relief
for less environmentally harmful vehicles, and despite a Sustainable Energy Authority
of Ireland (SEAI) grant of up to €5,000, EVs sales remain relatively low. Ireland
currently has a well-developed infrastructure for electric vehicles with over 1,200
public charging point and every town with a population of over 1,500 is equipped with
at least one. As the up-take of EVs increases so will the number of public charging
points. While the Electric Vehicle taskforce will undoubtedly make recommendations
to incentivise the up-take of electric vehicles, it is timely, particularly in the wake of the
Volkswagen emissions scandal and the Paris Climate Agreement, to examine how the
tax system can provide incentives in this regard.
Potential Tax Incentives
42. A number of tax incentives already exist for EVs, such as a (i) VRT relief and (ii) inclusion
of EVs on the list of products qualifying for accelerated capital allowances which allows
for the write off of the capital cost in year 1 rather than over the traditional 8 year
period.
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43. Benefit in Kind (BIK) can be an especially useful tool to incentivise the up-take of less
environmentally harmful vehicles. The Finance Act 2008 provided that BIK should be
emissions based rather than the current application of engine size. This piece of
legislation was not commenced at that time due to the overall economic landscape.
Given the potential environmental benefits it may now be an opportune time to
commence this legislation. Prior to commencement the 2008 BIK provision needs to
be updated and linked to the current VRT and motor tax categories to allow for
technological advancements in the intervening period. A separate provision for EV’s
at a zero rate has been suggested by the Minister for Transport, Tourism and Sport.
44. A full VRT exemption for EVs could be introduced for a period of 5 years, rather than
the rolling 2 year period which has been standard to date. The currently VRT relief of
up to a maximum of €5,000 is due to expire at the end of 2016. The removal of this
ceiling together with the longer period of exemption would send a signal to the car
sales industry and provide the necessary impetus to allow for an investment in electric
vehicles thus providing more options for customers.
Heavy Goods Vehicles
45. The UK HGV Road User Levy was introduced in April 2014. This has led to Irish HGVs,
using UK roads, facing an additional annual charge of up to €640. In lieu of the
introduction of a similar measure in Ireland, the rates of annual motor tax for HGVs
were reduced significantly. This was an interim measure while Department of
Transport, Tourism and Sport develop a similar system of road user charging for HGVs
to replace the Irish motor tax system. Budget 2016 provided for this reduction in
Motor Tax in respect of larger goods vehicles above 4,000kgs, with an annual rate of
€500 for vehicles between 4,000kgs and 12,000kgs and €900 for vehicles over
12,000kgs at an estimated annual cost of €43m.
46. The reduction in motor tax was the latest in a series of measures to reduce the
operating costs of hauliers. In July 2013 a diesel rebate scheme was introduced to
offset some of the costs of fuel for qualifying road transport operators. This offers a
partial refund of between 1c and 7c per litre depending on the average retail price of
diesel. The sustained period of low fuel prices in 2015 and 2016 has meant that the
price level above which the relief can be claimed has not been breached in that period.
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Improving Goods Vehicles
A recovering economy will see a return of increased goods traffic on our roads. The new
Minister for Transport, working with the relevant Oireachtas Committee, will review the
framework for the national goods fleet and if required will make recommendations on new
measures to incentivise the upgrading or replacement of older vehicles.
47. The above extract from Programme for Partnership Government identifies improving
the national goods fleet as a priority and proposes a review of the existing framework
to recommend, if required, new measures to incentivise the upgrading or replacement
of older vehicles.
48. The current tax rates applicable to heavy goods vehicles are not problematically
restrictive and therefore any reductions in the tax rates would not offer a significant
incentive. The rate of VRT is €200 per vehicle for all Category C vehicles. As indicated
above the highest annual rate of motor tax is currently €900. The Minister for
Transport established a working group to examine the possibility of moving to a system
of road user charging for commercial vehicles and the reform of the vehicles motor tax
regime. Some of the recommendations of that group include moving from the unladen
weight of the vehicle (weight of the truck only) to the gross vehicle design weight
(maximum design weight of the truck plus cargo and fuel). It was also recommended
that the vehicle type and axle configuration be used to further classify vehicles
encouraging vehicles with lower impact on the roadway. The Euroclass of the vehicle
should be used to account for the environmental impact of the vehicle.
49. The issue of Road User Charging is to be reviewed again following the publication of a
document on the topic by the European Commission; however, concerns remain
around the cost of implementing and operating such a system. Any recommendations
to incentivise the renewal of the commercial goods fleet and revision to the overall
framework should incorporate the above recommendations to ensure its efficacy,
especially in respect of incentivising reductions in emissions. The availability of
alternative fuels such as natural gas should ensure a cleaner HGV fleet in the future.
Vehicle Registration Tax
50. Vehicle Registration Tax (VRT) is a tax chargeable on the registration of motor vehicles
in the State, and has been in place since 1993, when it replaced the Motor Vehicle
Excise Duty (MVED). VRT is levied as a percentage of the open market selling price
(OMSP) of a passenger motor car. Since 1 July 2008, both VRT and Motor Tax on
private motor cars have been calculated on the basis of CO2 emissions, so that motor
cars with higher CO2 emissions attracted a higher tax liability. The bulk of revenue
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from VRT (nearly 96%) is raised on private motor cars. VRT is, by virtue of the nature
of the Irish motor car market, an extremely pro-cyclical tax. Car registrations and VRT
receipts declined significantly from a peak in 2007. New car registrations fell by 19%
in 2008 and 63% in 2009. The operation of a scrappage scheme between January 2010
and June 2011 led to a temporary boost in registrations in 2010 and 2011, though new
car sales again declined in 2012 and 2013. New car registrations increased in 2014,
and rapidly accelerated in 2015. This acceleration has continued into 2016.
Year
VRT Yield
New Car registrations
Used Car registrations
2008
€1,121m
146,637
55,819
2009
€375m
54,055
45,055
2010
€383m
85,264
37,125
2011
€388m
87,086
38,214
2012
€379m
76,237
37,902
2013
€437m
71,317
48,146
2014
€542m
92,613
32,806
2015
€659m
125,221
48,398
2016*
€745m
134,845 (Est)
48,646 (Est)
*estimate
51. The introduction of a second registration period beginning in July 2013 changed the
pattern of car sales, with a 58% increase in car sales taking place in July 2013, the
first month the new second registration period was introduced, over July 2012. This
has smoothed car sales somewhat over the calendar year, improving cash flow in
the motor trade. The pattern of car sales during the downturn has led to a relative
aging of private cars. In 2002, over 45% of licenced private cars were under four
years old, while in 2013 18% of private cars were under four years old. However,
the recent increase in new cars can be expected to address this issue over time.
52.
In Budget 2013, the emissions bands were adjusted to increase the incentive to
purchase less environmentally harmful motor cars and to increase revenue. These
changes are set out below:
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Old VRT Band
Old VRT Rate
New VRT Band
CO2 g/km
New VRT Rate
A
14%
A1
0-80
14%
A2
81-100
15%
A3
101-110
16%
A4
111-120
17%
B1
121-130
18%
B2
131-140
19%
B
16%
C
20%
C
141-155
23%
D
24%
D
156-170
27%
E
28%
E
171-190
30%
F
32%
F
191-225
34%
G
36%
G
Over 225
36%
Structural Reduction in VRT Yields
53.
There has been a marked shift towards lower CO2 emitting vehicles in recent years,
as consumers have moved towards purchasing cleaner and cheaper motor cars,
and car manufacturers have produced more fuel efficient motor vehicles. The table
below indicates the percentage of new cars sold by CO2 emission. 79% of new
motor cars sold emitted between 0 and 120 CO2 g per kilometre in 2016 to date,
compared to 13% of motor cars sold in 2009.
CO2 g/km
2009
2010
2011
2012
CO2 g/km
2013
2014
2015
2016*
0-120
13.0%
35.4%
42.7%
54.6%
0-80
0.1%
0.3%
0.87%
1.09%
81-100
12.4%
19.4%
21.12% 23.12%
101-110
13.6%
20.4%
28.83% 29.49%
111-120
35.7%
28.3%
21.07% 24.93%
121-130
17.6%
14.6%
13.55% 13.25%
131-140
14.8%
12.4%
10.10% 4.58%
121-140
44.7%
45.4%
48.0%
38.0%
141-155
19.7%
10.1%
4.9%
3.9%
141-155
3.6%
2.9%
2.74%
2.55%
156-170
13.4%
6.2%
2.6%
1.8%
156-170
0.9%
0.9%
0.94%
0.58%
171-190
6.7%
2.0%
1.0%
1.0%
171-190
0.8%
0.4%
0.61%
0.32%
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191-225
2.0%
0.7%
0.6%
0.6%
191-225
0.3%
0.4%
0.14%
0.08%
>225
0.4%
0.3%
0.2%
0.0%
Over 225
0.3%
0.3%
0.02%
0.02%
*To end of April 2016
54.
EU Regulation 443/2009 (as amended) mandated average CO2 emissions targets
for motor vehicle manufacturers that new cars do not emit more than an average
of 130g CO2/km by 2015 and an average of 95g CO2/km by 2020/2021. These
targets will further shift the new cars registered into the lower VRT bands, thus
reducing VRT receipts. Accordingly, for a given steady level of car sales there is a
structural reduction in VRT yield. This structural reduction may be addressed
through incremental increases in VRT rates, as a greater number of car sales move
into the lowest emissions bands.
55.
In addition to the need to reduce CO2 emissions, the current manufacturer tests,
the New European Driving Cycle (NEDC), for CO2 and fuel consumption are due to
be replaced by the newly developed Worldwide Harmonised Light Vehicles Test
Procedure (WLTP). The WLTP was developed to address the deviation between
official laboratory and real-world fuel consumption and CO2 values. The drive to
adjust the tests for the type approval of vehicles received increased political focus
as a result of the Volkswagen emissions scandal in Autumn 2015. While the
Volkswagen emissions issue did not relate to carbon emissions, but rather to
emissions of other oxides, the scandal led to a renewed political impetus to address
the issue of a discrepancy between real-world emission and laboratory based
emissions testing. The European Parliament in particular is keen to address
shortcomings in the type approval system. The Parliament voted in October 2015
urging the Commission to establish a Europe-wide federal body to oversee car
emissions standards.
56.
Following a period of using both standards between September 2017 and the end
of 2019 the WLTP is expected to be the sole standard beginning in 2020. The
European Parliament resolution of October 2017 has called for the immediate
implementation of the new standards in 2017, rather than the phased
implementation through 2017-2019. This proposal was rejected by the
Commission, which has proceeded to legislate for the lead-in period on the new
standards. The use of this different standard will likely require the current system
of bands for VRT and motor tax in Ireland to be redrawn.
Reliefs for Less Environmentally Harmful Vehicles
57.
Reliefs for hybrid electric vehicles were first introduced in the Finance Act 2001. At
that time the relief amounted to 50 per cent of the VRT payable on such a vehicle.
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In Finance Acts 2006 and 2007, the 50 per cent relief was extended to flexible fuel
vehicles, whose engines utilise a mix of ethanol and petrol, and to electric vehicles
respectively. In concert with movement of VRT to a CO2 basis, the reliefs for hybrid
electric, and flexible fuel vehicles (FFVs) were reduced to €2,500 in the Finance Act
2008, and electric motorcycles and vehicles were exempted from VRT. The Finance
Act 2010 extended the relief to plug-in electric hybrid, to encourage their entry
onto the Irish car market.
58.
The Finance Act 2011 reduced the maximum relief available for flexible fuel
vehicles and hybrid electric vehicles from €2,500 to €1,500, which recognised the
reduction in price of those vehicles and that plug-in hybrid electric vehicles, which
retained relief of up to €2,500, were less environmentally damaging. The VRT relief
in respect of electric vehicles was also limited to a maximum of €5,000. In the
Finance (No. 2) Act 2013 the relief for FFVs were phased out, as those type of
vehicles were no longer available on the market. In Budget 2015, reliefs for electric,
hybrid electric and plug-in hybrid electric vehicles were extended to 31 December
2016. The table below indicates the present reliefs, which unless renewed will end
on 31 December 2016:
Type of vehicle
Maximum Relief
Average CO2 emissions
Hybrid Electric Vehicles
€1,500
92g/km
Plug-in Hybrid Electric Vehicles
€2,500
50g/km
Electric Vehicles
€5,000
0g/km
Electric Motorcycles
Exempt
0g/km
59.
It may be prudent to establish a multi-year scheme for reliefs and exemptions
relating to low and zero emission vehicles beyond December 2016. For example,
establishing that these reliefs and exemptions will be in place for 5 years would
provide certainty in the marketplace, allowing sellers to incorporate a strategy for
electric and hybrid vehicles into longer-term business plans, and sending a message
to consumers that there is a policy commitment to ensuring that the up-take of low
and zero emissions vehicles will continue to be incentivised into the future.
60.
The policy rationale for these reliefs has been historically to encourage the
purchase of less environmentally harmful vehicles, with a view to reducing Ireland’s
transport-related greenhouse gas emissions. Relief is highest for those vehicles
with no emissions.
61.
As figure 6 shows, the cost of the relief peaked in 2010 before the relief for hybrids
and FFVs was restricted. As of 2014, there were 8,607 licenced hybrid electric
motor cars, 9,293 licenced flexible fuel motor cars and 529 licenced electric motor
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cars in Ireland, representing 0.44%, 0.48% and 0.03% of the total private cars
respectively.
Figure 6. No. of less environmentally harmful motor cars sold
(lhs) and total VRT foregone (rhs), 2001-2014
€25
4,500
4,000
€20
3,500
€15
2,500
2,000
€10
millions
3,000
1,500
1,000
€5
500
€0
20,000
1.0%
18,000
0.9%
16,000
0.8%
14,000
0.7%
12,000
0.6%
10,000
0.5%
8,000
0.4%
6,000
0.3%
4,000
0.2%
2,000
0.1%
0
0.0%
Hybrid
FFV
Electric
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
0
Figure 7. Number of less environmentally harmful motor cars
licenced (lhs) and as % of total cars licenced (rhs),
2001-2014
Total Cost
Hybrid
FFV
Electric
As % of total
Light Goods Vehicles
62. The Department of Transport has proposed the application of an emissions based VRT
system to light commercial (Category B) vehicles.
63. Light commercial vehicles are subject to a rate and structure of VRT lower than that
applied to private vehicles. Light commercial vehicles, less than 3.5 tonnes, are
classified as Category B vehicles for VRT purposes. They are currently liable for VRT of
13.3%, subject to a minimum of €125, of the Open Market Selling Price (OMSP). Larger
commercial vehicles (over 3.5 tonnes) make up the vast majority of commercial vehicle
sales and are currently categorised in VRT Category C and incur a flat rate charge of
€200.
64. The Department of Transport proposal aims to incentivise the purchase of vehicles
which produce lower CO2 emissions by introducing three bands of VRT for category B
vehicles. These three bands would be based on carbon emissions, as already applies to
private vehicles, and would be set at rates of 10%, 14% and 18%. These rates would
provide businesses with the opportunity to lower their VRT liability from 13% to 10%
if they purchase carbon efficient vehicles.
65. The proposal seeks to address the discrepancy whereby 11 different rates for Category
A vehicles are applied while the Category B and Category C vehicles are both subject
to 1 flat rate, with no incentive to purchase vehicles with lower carbon emissions.
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66. If VRT were applied in this way to the 5,923 vehicles registered in Category B in 2015,
the average increase in VRT per vehicle would be €1,533. The increased yield would
be €11.3m based on 2015 figures. In total the yield from category B in 2015 under this
system would have been €37,273,283. (see Appendix III)
67. As Appendix IV shows, the proposed introduction of 10%, 14% and 18% rates would
present businesses with the opportunity to reduce their VRT liability, should they opt
to purchase a vehicle in bands A1-A4. These bands are subject to the 10% rate, and
would have led to a €550 to €900 decrease in VRT liability on 2015 figures in those
bands. Purchasing vehicles in bands B and C would have caused a €180 to €300 increase
in VRT liability, at the 14% rate in 2015. Finally purchasing vehicles in the highest
emission bands would have led to an increase of up to €2600 in VRT liability in 2015,
applying a rate of 18%.
68. The potential benefits of introducing banded rates of VRT on light commercial vehicles
are twofold: an increase in revenue to the Exchequer and a positive environmental
impact via a reduction in CO2 emissions as companies choose vehicles which are more
cost effective and fuel efficient.
69. The implementation of the proposal would require significant administrative and
system changes for Revenue and industry. The introduction of the emissions based VRT
system for private cars in 2008 was preceded by a public consultation process
announced in Budget 2007 and allowed for a lead in time of six months from its
introduction in Budget 2008.
70. While the measures above would raise revenue and may have a positive effect on CO2
emissions in the long term, they may have a negative effect on the economy by
increasing the costs of doing business and in turn increasing the price of consumer
goods. However, the proposal also offers businesses the opportunity to reduce their
VRT liability by purchasing vehicles with lower emissions, which in turn would also
reduce their fuel costs as such vehicles have greater fuel efficiency. Companies that
benefit from reduced fuel costs and the lower rate of 10% (than the current 13.3%
rate) could in turn reduce the price of consumer goods. The business effects of the
banded VRT proposal for light commercial vehicles is dependent on the degree to
which business respond to the new bands.
Gender and Equality Implications
71. There are no specific gender or equality implications with regard to these tax issues.
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Options
Transport Fuel
72. The products which offer the largest yield from increases in the rate of both excise and
carbon tax are petrol and diesel. If the equalisation of excise duty rates is to be
implemented as a policy it may be prudent to do so over a period of 5 years. By sending
the signal that this policy will be implemented gradually over a number of years this
will minimise the impact on competitiveness as it allows scope for decisions by
businesses, who are the primary users of diesel, over the medium-term to be futureproofed. A 5 year period may also provide for greater incentive for the adoption of
natural gas as a transport fuel which was introduced in Budget 2015 with the excise to
be held at the minimum rate (€9.36 per megawatt hour) allowable under the Energy
Tax Directive for a period of 8 years. As the below table shows equalising the excise
rates over a 5 year period would yield, on average, an additional €65.8m giving an
estimated cumulative yield over the 5 year period of €327.9m, assuming no change in
behaviour.
Pathway to Equalisation of Petrol and Diesel Excise Rates
Petrol Diesel
excise excise
Current Rates 58.77 47.90
Per Litre
2017
58.77 50.08
2018
58.77 52.25
2019
58.77 54.42
2020
58.77 56.60
2021
58.77 58.77
Yield
€66.3m
€65.9m
€65.6m
€65.2m
€64.9m
Cumulative
yield
€66.3m
€65.9m
€65.6m
€65.2m
€66m
€132m
€66.3m
€198m
€65.9m €66.3m
€263m
€65.6m €65.9m €66.3m €328m
73. If necessary, to limit the impact on the cost of doing business the diesel rebate scheme
could be amended to offset some of the additional costs imposed on road transport
operators. This could form part of a larger strategy to clean up the overall fleet of
vehicles in Ireland, including changing the basis of motor tax for HGVs and eventually
moving to road user charges.
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74. The estimated revenue from straight-forward increases in excise on petrol and diesel
are set out below.
Increase (VAT inclusive)
Petrol
Auto-diesel
Cent per litre
Yield
Yield
1
€13m
€25m
3
€37m
€74m
5
€61m
€123m
10
€120m
€244m
Options around Carbon Tax
75. An increase in the rate of carbon tax by €5 per tonne of CO2 emitted would raise in the
region of €109m annually while a corresponding increase of €10 per tonne of CO2
emitted would yield €218m. It is important to be cognisant of the impact the
application of carbon tax is reported to be having on solid fuel traders, any increase
would exacerbate this as well as impacting negatively on fuel poverty (see paragraph
29).
Impact of Increases in Carbon Tax (including VAT)
Product
Unit
€5
€10
Petrol
Litre
1.40c
2.80c
Diesel
Litre
1.64c
3.27c
Coal
40kg bag
60c
120c
Peat briquettes
Bale
13c
26c
Options around Electricity Tax
76.
Should the tax rates for business and non-business be equalised as outlined earlier in
this paper, it would lead to an increase in yield of €4.5m per annum.
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Options around Benefit in Kind
77.
Updating and commencing the benefit in kind provisions in Finance Act 2008 would
offer incentives for the adoption of less environmentally harmful vehicles. The
inclusion of a new category for EV should also be considered to allow for early adoption
of this developing technology.
78.
The taxable benefit of benefits-in-kind, including in respect of company cars, are not
separately identified on returns so it is not possible to estimate accurately the likely
cost of this measure in the absence of such information.
Vehicle Registration Tax Options
79.
It should be noted that as consumers move to lower CO2 emitting vehicles, the VRT
yield per motor car declines given the structure of the VRT rates. In terms of revenue
raising option, the following table outlines estimates of yields in 2017 where (Option
1) the rates remain the same and (Option 2) the rates are each increased by 1%.
No. of new car sales
120,000
125,000
130,000
135,000
Option 1- Status Quo
€539.8m
€562.3m
€584.8m
€607.3m
Option 2- 1% increase
€578.4m
€602.5m
€626.6m
€650.7m
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Appendix I – Carbon Tax Options
Estimate of additional Revenue yield from an increase of €5 /Tonne CO2 in rate of 'Carbon Tax'
VAT
Exclusive
VAT
Inclusive
Fuel Type
Unit
Price
Carbon tax
per unit
Carbon
tax
per
unit
% price
increase
Gross
Carbon
Tax
Exempt
under ETS
Net
Carbon
Tax
VAT
Revenue
yield VAT
inc. € m
Autodiesel
Petrol
Kerosene
Marked
Gas Oil
LPG
Fuel Oil
Natural
Gas
Peat
Briquette
Coal
Total
litre
1.159
0.0133
0.01636
1.41%
38.67*
0.0
38.67*
0.73*
39.40*
litre
k/litre
k/litre
1.329
520
586
0.0114
12.6426
13.6361
0.01399
14.3494
15.4769
1.05%
2.76%
2.64%
13.62*
12.83
13.65
0.0
0.0
0.01
13.62*
12.83
13.59
3.06*
1.73
0.73
16.68*
14.6
14.32
k/litre
k/litre
1
MWH
Bale
660
580
72
8.1075
15.4077
0.9097
9.2020
17.4878
1.0325
1.39%
3.02%
1.43%
2.05
0.90
48.78
0.02
0.41
34.63
2.03
0.49
14.15
0.22
0.00
1.15
2.25
0.49
15.29
4.75
0.1146
0.1301
2.74%
1.56
0.00
1.56
0.21
1.77
40kg
18.3
0.5268
0.5979
3.27%
24.66
156.71
20.44
55.57
4.22
101.15
0.51
8.34
4.73
109.49
Estimate of additional Revenue yield from an increase of €10 /Tonne CO2 in rate of 'Carbon Tax'
VAT
Exclusive
VAT
Inclusive
Fuel Type
Unit
Price
Carbon tax
per unit
Carbon tax
per unit
% price
increase
Gross
Carbon
Tax
Exempt
under
ETS
Net
Carbon
Tax
VAT
Revenue
yield VAT
inc. € m
Autodiesel
Petrol
litre
1.159
0.0266
0.03273
2.82%
77.12*
0.0
77.12*
1.45*
78.57*
litre
1.329
0.0228
0.02799
2.11%
27.19*
0.0
27.19*
5.90*
33.09*
Kerosene
k/litre
520
25.2852
28.6987
5.52%
25.66
0.0
25.66
3.46
29.12
Marked
Gas Oil
LPG
k/litre
586
27.2721
30.9539
5.28%
27.29
0.12
27.18
1.47
28.64
k/litre
660
16.2150
18.4041
2.79%
4.11
0.05
4.06
0.44
4.50
Fuel Oil
k/litre
580
30.8155
34.9756
6.03%
1.80
0.83
0.97
0.00
0.97
Natural
Gas
Peat
Briquette
Coal
1 MWH
72
1.8194
2.0650
2.87%
97.55
69.26
28.29
2.29
30.58
Bale
4.75
0.2292
0.2601
5.48%
3.12
0.00
3.12
0.42
3.54
40kg
18.3
1.0535
1.1958
6.53%
49.32
40.88
8.44
1.03
9.46
313.15
111.14
202.02
16.46
218.48
Total
* Elasticities applied to calculations relating to auto-fuels
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Appendix II – EU Excise Tax Rates
Comparison of Excise Tax Rates for Petrol and Diesel in EU Member States
Unleaded petrol
Member State
€ per 1,000
litres
769.9
1
748.29
2
728.4
3
681.3
4
673.04
5
670
6
654.5
7
641.2
8
619.1
9
617.51
10
611.35
11
587.71
12
549.38
13
545.25
14
514.5
15
505.24
16
482
17
479
18
472.53
19
465
20
462.09
21
461.92
22
436
23
434.43
24
424.69
25
393.18
26
383.63
27
363.02
28
549.08
359
Diesel
Member State
€ per 1,000
Litres
Netherlands
UK *
748.29
UK *
Italy
617.4
Italy
Sweden
592.93
Finland
Finland
506.1
Sweden
France
498.1
Greece
Netherlands
484.47
Germany
Ireland
479.02
France
Malta
472.4
Belgium
Germany
470.4
Portugal
Belgium
464.83
Denmark
Slovenia
462.4
Ireland
Cyprus
450
Malta
Estonia
448
Slovenia
Romania
429.6
Slovakia
Denmark
416.06
Croatia
Czech Republic
402.97
Austria
Portugal
402.01
Cyprus
Croatia
400.52
Czech Republic
Austria
397
Estonia
Slovakia
386.4
Luxembourg
Hungary
352.78
Romania
Poland
343.64
Latvia
Latvia
341
Lithuania
Luxembourg
335
Spain
Spain
331
Poland
Bulgaria
330.29
Hungary
Lithuania
330.17
Bulgaria
Greece
330
EU Average (28)
EU Average (28) 436.53
EU minimum Rate
EU
Minimum 330
Rate
* UK exchange rate €1 = Stg £0.77443 @ 23/05/2016
Source: EU Commission Tables of Excise Rates in MS (January 2016 version)
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Appendix III The table below demonstrates possible changes to the structure of
VRT on Category B. The table also shows the increased yield per band if such a regime were
introduced.
CO2
Emissions
CO2g/km)
Percentage
payable
of
the value of
the vehicle
(Category A)
Current
Commercial
VRT Rate
(Category
B)
CO2 Emissions
(CO2g/km)
Proposed
Commercial
VRT Rate
(Category
B)
Current
Yield
13.3%
0g/km up to and
including 80g/km
14% or €280
whichever is
the greater
15% or €300
whichever is
the greater
16% or €320
whichever is
the greater
13.30%
0g/km up to and
including
120g/km
10%
More
than
80g/km up to and
including100g/km
More
than
100g/km up to
and
including
110g/km
More
than
110g/km up to
and
including
120g/km
More
than
120g/km up to
and
including
130g/km
More
than
130g/km up to
and
including
140g/km
More
than
140g/km up to
and
including
155g/km
More
than
155g/km up to
and
including
170g/km
More
than
170g/km up to
and
including
190g/km
More
than
190g/km up to
and
including
225g/km
More
than
225g/km
Unclassified (CO2
= 999)
Total
Proposed
Commercial
VRT Yield
Difference
€3,119
€2,570
-€549
13.30%
€115,722
€83,834
-€31,888
13.30%
€654,514
€481,861
-€172,653
17% or €340
whichever is
the greater
13.30%
€132,594
€96,745
-€35,849
18% or €360
whichever is
the greater
13.30%
€1,184,843
€1,270,779
€85,936
19% or €380
whichever is
the greater
13.30%
€1,120,967
€1,203,752
€82,785
23% or €460
whichever is
the greater
13.30%
€998,893
€1,078,381
€79,488
27% or €540
whichever is
the greater
13.30%
€503,644
€737,771
€234,127
30% or €600
whichever is
the greater
13.30%
€1,542,143
€2,236,251
€694,108
34% or €680
whichever is
the greater
13.30%
€15,643,524
€22,744,901
€7,101,377
36% or €720
whichever is
the greater
13.30%
€2,236,955
€3,258,873
€1,021,918
€1,871,722
€4,077,565
€2,205,843
€26,008,640
€37,273,283
€11,264,643
More
than
120g/km up to
and
including
155g/km
More
155g/km
than
14%
18%
at
| 28
Tax Strategy Group | TSG 16/03 Climate Change Paper – Energy and Environmental Taxes and
Vehicle Registration Tax
Appendix IV
VRT is calculated on the Open Market Selling Price (OMSP) of the motor vehicle. Applying
the new rates to N1 vehicles registered in 2015 as Category B vehicles would have raised
€37.2m rather than the €26m raised using the 13.3% rate. The table below indicates the
effects on the liability of each vehicles in each class:
Category B
VRT Band
NO.
Vehicles
A1
2
A2
35
A3
302
A4
46
B1
347
B2
347
C
264
D
88
E
266
F
2,676
G
557
Unclassified 993
(CO2 999)
Total
5,973
of Average New OMSP Average New VRT Category B VRT
Difference
€40,705
€23,287
€16,009
€21,032
€26,158
€24,850
€29,288
€46,576
€46,357
€44,034.95
32,504
€22,813
€2,570
€2,329
€1,601
€2,103
€3,622
€3,479
€4,100
€8,384
€8,344
€7,926.29
€5,851
€4,106
€3,119
€3,214
€2,174
€2,882
€3,442
€3,239
€3,798
€5,723
€5,754
€5,535.22
€4,016
€1,884
-€549
-€885
-€573
-€779
€180
€240
€302
€2,661
€2,590
€2,391
€1,835
€2,222
€36,416
€5,924
€4,391
€1,533
| 29