Brian Leddin (Limerick City, Green Party) | Oireachtas source

I welcome the Minister and thank him for coming in to speak with us. I raise the issue of VRT on new and imported fossil fuel vehicles, including so-called hybrid vehicles. I raise the matter because, as the Minister knows, we have very ambitious climate action targets. Transport represents 20% of Ireland's greenhouse gas emissions and private cars represent the majority of emissions from that sector. We need to follow the example of Norway and significantly increase taxation on the purchase and importation of fossil fuel vehicles. The reason to do that is to prevent a lock-in of transport emissions over the next 15 years. We have to do that quickly, as soon as possible. It is better to do it sooner rather than later. There are clear and serious climate reasons to do so.

We have had a significant build-up of household savings during the pandemic, as the Minister knows and as others have mentioned. From a balance of payments perspective, the purchase of new vehicles involves a lot of money leaving the State, compared to other, more labour-intensive household spending items such as home renovation. Our taxation system should reflect that. The average lifetime of a vehicle is approximately 15 years so new fossil fuel cars will be part of the national fleet for a long time. It is appropriate to give an increased price signal to reflect our climate commitments.

While electric vehicles are getting cheaper, there is not yet cost parity between fossil fuel vehicles and fully electric vehicles. We can use VRT increases on fossil fuel vehicles to achieve cost parity in the next year, as has been done in Norway. As most people know, Norway has one of the best take-ups of electric vehicles in the world. Significantly raising VRT on fossil fuel vehicles would be a progressive taxation. It would target taxation at those who are wealthy enough to purchase a new vehicle. The Minister said to me in a meeting a few months ago that the taxation system changed in January, when we brought in the new worldwide harmonised light vehicle test procedure, WLTP, emissions rating for VRT. The information I have is that the top selling new car in Ireland is a fossil fuel sports utility vehicle. It is clear to me that further market signals are needed.

Raising VRT for fossil fuel vehicles is also necessary to balance out the loss to the Exchequer from the increased take-up of zero-emission vehicles which attract a lower tax. While stability in taxation policy is desirable, our significant climate action agenda means it is inevitable that we will need to frequently change VRT and, indeed, motor tax to ensure the State's income stream is protected. I ask the Minister to consider a significant increase in the VRT charged on fossil fuel vehicles.

He should do so as a prudent move to ensure the sustainability of the Exchequer as well as of future greenhouse gas emissions.