The introduction of a new car emissions tax system is just around the corner, but policing CO2 motor ratings is not easy, writes Donal Byrne
There are just over three months to go before the introduction of a new car tax system, which will see the introduction of higher tax rates on cars producing higher rates of CO2 emissions. It will also reward buyers of cars producing less emissions, but no details of how the scheme will operate have yet been finalised, according to the Department of the Environment.
In fact, it is likely to be during the budget speech by the Minister for Finance, Brian Cowen, in early December when car buyers and the companies that distribute them first discover how the new tax regime will work.
Already some industry experts are warning that the Government will have to consider very carefully how such tax ratings will apply. The policing of these ratings is extremely difficult and some car companies are producing emissions figures that make some cars look better than they actually are. There are indications here that the Government will accept the submitted figures of car companies, which may not actually reflect the real green credentials of their cars.
"We have had some genuine efforts to reduce CO2 emissions, such as using narrower tyres, higher gear ratios and reducing aerodynamic factors and these are very welcome and justified," says one industry figure.
"But we have also seen some companies putting the base model of the range in for assessment and getting a certain low rating. They then record lower ratings for a particular range, using the bias of the lower figure for the base model.
"What they neglect to take into account is the extra 'heavy' equipment they are providing on the rest of the range, such as air conditioning, central locking, wider tyres and sunroofs that make the car heavier and produce more emissions.
"We have even noticed that some companies are testing their tyre emissions levels in high temperatures when they will get lower readings. In some cases, car manufacturers can bring their car right down from one emissions bracket to a lower one and that makes them look very good. It is not accurate though," said the industry figure.
He also pointed out that companies were allowed a 4 per cent margin on the tests and that companies could find ways of having their cars in tax bands that might not be entirely appropriate.
In the UK there has been a system of policing emissions figures based on "derivative" models, apart from the base model in the range, for some years.
"By using these techniques, some companies make their cars look a lot better in terms of the overall average and this is something the Irish authorities will have to look closely at," said the industry figure.
"If they look at the UK system then they will find a good model to follow because all derivatives are tested and the emissions results recorded. That is not the same in all other European countries."
Industry experts say the emission testing system currently in use in Europe is fundamentally sound, but point out that if Ireland does not have an independent testing system (in other countries there are appointed independent laboratories for testing emissions), it should be careful about accepting the submitted figures from car companies.
"If you don't have your own system of verification then you may be relying on car companies which will submit the figures that best suit them," said another expert.
"Also, in some countries some laboratories are seen as more lenient than others. As we know it is not really all that difficult to make a car look a lot greener than it actually is."
Car companies have been furiously working at reducing CO2 emissions (one of the main contributors to greenhouse gases) because of taxes such as the one imminent in Ireland and because customers are demanding cleaner cars. In Sweden, for example, the government now provides a tax incentive for buyers of cars producing 120 grams or less of CO2 per kilometre, which is the figure being aimed for by many countries. Many small- to average-sized cars produce around 20 grams more, which is why the companies are so keen to find every possible way of reducing emissions.
Buyers in Sweden benefit to the tune of €1,100 when they opt for the lower emission cars. The result is that sales of cars above 120 grams have dropped by 40 per cent and sales of the cars with lower levels have risen by 200 per cent.
The Department of the Environment here has indicated three tax options for the CO2 regime due to be introduced here from January 1st next year. But a statement from the Department also seems to indicate that car manufacturers will be able to submit their own emissions figures for taxation requirements.
"The mechanism for the new arrangement will have regard to the individual CO2 emission rating for each car as determined by the manufacturer as well as the existing engine cc based motor tax band appropriate to each vehicle.
It is proposed that within each of the existing cc bands, there will be three possible motor tax charges influenced by CO2 ratings as follows:
o low CO2 ratings which will attract a discounted motor tax rate;
o medium range CO2 ratings which will attract the standard rate of motor tax;
o high CO2 ratings which will attract premium motor tax charges (higher than the standard rate).
Cars which are registered prior to January 1st, 2008, will continue to be taxed in accordance with current arrangements and CO2 ratings will not apply to these vehicles," says the statement. So, we will have to wait for another two months or so to find out exactly how this system will work. One reason for the delay in releasing details is the fact that the Department does not want some people rushing to bring in "dirtier" pre-2008 models from outside the State.
In the meantime, however, the Department would be well advised to look for more independently validated figures before committing itself to accepting just industry figures.