Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I extended the release to the end of 2020 to continue to support the transition to a cleaner national fleet of passenger cars. This is in line with the broader Government policy to reduce emissions from the transport sector and meet our carbon reduction targets. I am introducing CO2 ceilings to the reliefs to ensure that only low-emission vehicles will benefit from the tax incentives. There is clear evidence that certain hybrid models emit average and even high levels of CO2. I cannot justify, from either an environmental or a value-for-money perspective, continuing to spend millions of euro of taxpayers’ money to assist in the purchase of average or high CO2 emitting vehicles.

The reliefs were due to expire entirely at the end of December 2019. That was the default, with no expectation that the reliefs should or would be extended. The tax strategy group paper set out the full elimination of the relief, including the fact that general policy is not to provide either SEAI grants or toll reliefs to conventional hybrid vehicles. As such, it should not be in any way surprising that the changes have been made. Approximately one third of new cars are registered in January of each year, and the amendment seeks to delay the introduction of the ceilings until February next year. Doing so would undermine the integrity of the policy decision to place an emissions ceiling on the reliefs as they are extended. The reliefs are generous as they are and evidence has shown there is no justification in extending the reliefs in the proposed manner.

In a broader context, the debates on the Finance Bill 2017 and the Finance Bill 2018 showed that such a change was clearly on the cards. There were a number of other changes it was expected I might make that would have had consequences for the motor industry, such as to the status of the introduction of worldwide harmonised light vehicle test procedure, WLTP, and its integration with the tax code or vehicle registration tax, VRT. I did not make the changes because of my acknowledgment of some of the changes that are under way in the motor industry in any case. It was clearly flagged that I intended to make the change. During other debates we have had in committee, Deputies Michael McGrath and Pearse Doherty made the point that if a change is made to the tax code, when evidence changes, we are reluctant, or at times unable, to unwind the change or to change it further. I flagged in two successive years that a change was on the cards and I am now making it. If I were to defer it to February, the effect would be that many cars due to be sold then would not be covered by the policy change we seek to make.

For these reasons, the amendment is not the change I wish to make. I hope the arguments I have put forward, as well as how well flagged the change has been, might give the Deputy reason to reconsider.