Budget implications for the motor industry

Commenting on Budget 2021, SIMI director general Brian Cooke has expressed disappointment with the increase in VRT.

He said: “In the context of the current economic climate, Covid-19, Brexit and an already depressed new car market, the motor industry is disappointed with the increase in VRT announced in Budget 2021.

“Overall, the changes to the VRT system result in an average €1,000 increase on the price of a new family car. This will make the new car market even more challenging for next year, reducing demand and slowing down the replacement of the oldest cars in the national fleet with newer, lower-emitting cars, which in turn will make it more difficult to drive down emissions.”

With the full implementation of the new emissions testing system, WLTP, from January next, there will be a new structure of rates and bands for VRT and motor tax. This new structure sees an increase in the number of VRT bands to 20, with a wider gap between the highest and lowest VRT rate (7% to 37%).

Following on from its introduction in last year’s budget, there will be an adjustment of the nitrogen oxide (NOx) surcharge bands so that higher NOx emitting vehicles will pay more.

Motor tax rates will remain unchanged for all cars in the engine sized regime and all but the most pollutant cars in the post-2008 regime.

A third motor tax table for cars registered from January 1 next will take account of the introduction of the WLTP emissions test.

Meanwhile, the chief executive of Toyota Ireland, Steve Tormey, has said the new VRT system will have a positive impact on car market for 2021.

He said: “I welcome the introduction of the new tax bands for passenger cars proposed in today’s budget. They clearly indicate the future policy direction for government, whereby motorists will now be increasingly rewarded for purchasing lower emitting vehicles, such as hybrid and electric, while paying more if opting for higher emission vehicles, such as diesel.

“We see the new VRT system as a positive impact on the car market for 2021 by giving consumers clarity about government intentions for car purchases.”