Two-tier motor tax system 'penalises unfairly'

Motorists who already drive low-emission vehicles are criticising the new two-tier motor tax system, as they feel it penalises…

Motorists who already drive low-emission vehicles are criticising the new two-tier motor tax system, as they feel it penalises them unfairly for already owning a low-emission vehicle.

When the Minister for the Environment, John Gormley, announced the new road tax system on December 6th, he stated that new cars and pre-owned imports registered from July 1st, 2008, would be taxed based on their CO2 emissions from Band A (less than 120g/km) to Band G (more than 225g/km).

However, cars registered before this date are still taxed on the old system which is based on the cubic capacity of the engine and these rates rise by at least 9.5 per cent from February 1st. This means that owners of cars which are now deemed to be "clean", but were registered before July 1st, 2008, will pay, in some cases, significantly more road tax than the newer models. This will affect their residual values, as buyers will be hesitant to purchase a car that will cost them more in road tax.

For example, a Skoda Octavia 1.9-litre TDI registered before July 1st, 2008, will be subject to road tax of €560, but one purchased after July 1st will be subject to just €150 road tax.

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Fine Gael spokesperson on environment, heritage and local Government, Phil Hogan, said, "this new taxation system appears not to have been well thought-out.

"They appear to have just adapted the UK system and are erring on the side of the revenue rating," he said.

"We would prefer to see a system that uses all the available resources, such as the NCT, to take into account the road worthiness and emissions of existing cars on the road."

Cyril McHugh, chief executive of the Society of the Irish Motor Industry (SIMI) is calling for a change to this new road tax system to allow drivers making cleaner choices now to avail of the new lower road tax bands.

"We would welcome an amendment to the system which would allow people in the process of buying a new car to avail of the new motor tax bands upon renewal of their motor tax, as this would encourage people to make cleaner choices in the interim."

Conor Faughnan of the Automobile Association (AA) is sympathetic to these motorists, but points out that any change in a taxation system is going to have its drawbacks.

"While we do have sympathy for motorists of existing 'clean' cars, if this taxation system had been retrospective it would have negatively affected a greater number of people.

"We did however feel that the increase of 9.5 per cent to the current motor tax system was unjustified for smaller engine cars because it bears little relation to the environment, but is just a pure tax increase," he said.