The Department of Finance is rethinking its reforms to the current Vehicle Registration Tax (VRT) system so that they will take full account of a vehicle's emissions, and no longer base charges on engine size.
A Department of Finance spokesperson confirmed the change of mind: "We have met with a number of stakeholders and a range of possible options are now being considered, including a full CO2 emissions-related scheme."
Should such a scheme be adopted, it would bring Ireland in line with European Commission recommendations to end vehicle registration taxes and instead tax motorists according to the amount of pollutants their vehicles emit. Such a move would be a major step away from the reforms the Minister indicated he would favour following his announcement of the tax reforms.
The Department of Finance published four options following his announcement in his December Budget speech that VRT was to be significantly modified.
Submissions were then invited suggesting which of the four options were preferable.
However, a number of the 61 submissions, which were made by organisations such as the AA and the motor industry representative body, SIMI, as well as from vehicle importers and members of the public, suggested that none of the four published options went far enough.
While the Department published the four options that clearly indicated how it intended to reform VRT, it is understood that these meetings prompted a change of thinking.
The high number of submissions that suggested a tax, based solely on a vehicle's emissions taken together with the Minister for Finance's promise to take into account the views of interested parties before making a decision, indicate that he may go further than was first thought.
Mr Cowen also stated in his Budget speech that the changes would take effect from January 1st, 2008. But several of the submissions from the motor industry have warned that an implementation date as early as January 1st would have a damaging effect on new vehicle sales.
Meanwhile, Green Machines, the Irish supplier of the zero-emission Vectrix Scooter, has been told that its scooter is not eligible for a VRT reduction. Managing director Robert Nolan explained: "Unlike hybrids, which still produce substantial greenhouse gasses, our Vectrix scooter, a 100 per cent emissions-free vehicle, has been refused any VRT reduction.
"It is comical that when we were in contact with the Department of Finance they informed us that VRT reductions are only available for cars, as they are specifically mentioned in the Finance Bill. Under this logic a carbon producing hybrid vehicle will get a 50 per cent VRT refund, while a carbon-free scooter will not." Green Machines is now calling on the Government and opposition parties to immediately remove VRT and reduce VAT on zero-emission vehicles.